Power Tunisia RFI and SSN - English - Final.pdf

REQUEST FOR INFORMATION AND SOURCES SOUGHT NOTICE

Activity: Power Tunisia Project

Notice Type Request for Information and Sources Sought Notice

Issuance Date: November 6, 2020

Response Due Date: November 27, 2020 at 17:00 in Frankfurt

Response Email Address: tunisiasolicitations@usaid.gov

The United States Agency for International Development (USAID) Mission in Tunisia posts this request to: 1) gather information and suggestions to inform the design of a new five-year, $50-60 million energy project, and 2) identify potentially capable organizations to perform the requirements of the planned activity. Interested parties can respond to either the Request for Information (RFI), the Sources Sought Notice (SSN), or both.

This is not a Request for Proposals or a Request for Applications and is not to be construed as a commitment by the U.S. Government to issue a solicitation or a Notice of Funding Opportunity (NOFO), or ultimately award a contract or assistance agreement on the basis of this RFI and SSN. If, at a later date, a solicitation or a NOFO is issued, it will then be announced on the Federal Business Opportunities website at https://beta.sam.gov/ or on the Federal Grants website at https://www.grants.gov, as applicable. Interested organizations must then respond to the solicitation or NOFO announcement separately. Furthermore, the attached activity description should not be considered as verbatim language to be included in a future solicitation or NOFO.

Please also note the following: (a) responding to this RFI and/or SSN will not give advantage to any organization or individual for any subsequent competition; (b) responses are not offers and cannot be accepted by the U.S. Government to form a binding award; (c) the U.S. Government will not pay for any information voluntarily submitted as a result of this request; (d) responses may be used by USAID without restriction or limitation, therefore proprietary information should not be sent; and (e) applications, proposals, or resumes will be discarded, and should therefore not be included in your response.

mailto:tunisiasolicitations@usaid.gov https://beta.sam.gov/ https://www.grants.gov/

Response Requirements

Responses to this RFI and/or the SSN must be either in English or French and must not exceed the page limitation for each section:

a) Request for Information [No more than seven (7) pages]

USAID is seeking feedback to determine the soundness and robustness of the attached draft activity description, as well as to incorporate new, innovative ideas into the final design. Interested parties should provide the following:

1. General feedback on the draft activity description.

2. Specific feedback to the following questions:

i) Are the expected results feasible and achievable within the proposed scope, budget, and time frame?

ii) Are there other areas, considerations or issues that are not accounted for and are essential to achieve the proposed results?

iii) What are the challenges with the proposed approach?

iv) Do the stated objectives reflect the development challenge?

v) Do the expected results address the identified challenges?

vi) Which results have the most priority?

vii) What is the best approach to engage with local organizations including non-profits, civil society organizations and small local businesses in this sector?

viii) How can USAID utilize advanced technologies to achieve the activity’s objectives?

ix) What are the innovative ways to engage the private sector to achieve the overall purpose of the activity?

x) What is the most effective approach to incentivize private sector investment in the sector?

b) Sources Sought [no more than 3 (three) pages]

Interested organizations are requested to demonstrate their ability and experience to perform the requirements of the planned activity by including the following in their response:

1. Organization name and contact information.

2. One-page statement describing the organization and (if any) potential partners’ capability.

3. Two-page statement describing the organization and (if any) its potential partners’ experience in similar scope and magnitude to the services being required, including experience working in Tunisia and/or the Middle

East/North Africa.

Organizations responding to this SSN should ensure that its response is complete and sufficiently detailed to allow the government to determine the organization's qualifications to perform the work.

Response Instructions

Please send your response to this notice via email to tunisiasolicitations@usaid.gov by the date indicated above with the subject “Power Tunisia Project.” Responses must include the organization’s name, address, and point of contract, phone number and email address. You will receive a confirmation acknowledging receipt of your response, but you will not receive feedback.

Thank you for your assistance and interest in USAID programs.

Sincerely, /S/

Craig Smith Regional Contracting Officer Middle East Regional Platform

Attachment 1 – Draft Activity Description mailto:tunisiasolicitations@usaid.gov

DRAFT ACTIVITY DESCRIPTION

Power Tunisia Project1

C.1 PURPOSE

The Power Tunisia Project was designed to assist the Government of Tunisia in its effort to meet increasing demand for electricity while promoting energy conservation.

This activity will contribute to the following high-level results planned for the energy sector by the Government of Tunisia:

● Increase domestic electricity production from renewable sources to 30 percent by

2030.

● Reduce energy demand by 30 percent by 2030.

● Lower the carbon intensity across all sectors by 41 percent by 2030.

● Reduce electricity losses.

● Increase private-sector-led investment and innovation.

To advance these objectives, the implementer must partner with the relevant government agencies and the local and international private sector, as well as collaborate with international donors and multilateral banks.

C.2 DEVELOPMENT CHALLENGE

Tunisia faces significant challenges in the energy sector. In the past decade, Tunisia’s technical and commercial electricity losses have accelerated, and commercial losses are especially apparent. Furthermore, Hydrocarbon licensing in Tunisia has stalled and existing production has not kept pace with increasing demand. Today, around 97 percent of Tunisia’s electricity is derived from a single source, natural gas, and 65 percent of the natural gas is imported from Algeria at inflated prices. Fossil fuel Imports contributed to the increase in the trade deficit which reached 40 percent in 2019.

Despite price increases, the majority of energy products are also heavily subsidized with electricity holding the lion’s share. Between 2017 and 2018, electricity subsidies grew from 0.73 percent to 0.93 percent of the Gross Domestic Product (GDP). Viewed in terms of energy independence, the rate of domestic energy supply compared to domestic demand has deteriorated from 95 percent in 2010 to 48 percent in 2018.

1 USAID refers to the activity interchangeably as the “Power Tunisia Project”, “Energy Project”, “the

Activity” or “the Project.” Interested organizations and individuals responding to this RFI/SSN can propose a new name for the project that follows USAID guidance on project naming (ref. USAID Graphic Standards Manual, https://www.usaid.gov/branding).

To tackle these challenges, the Government of Tunisia adopted an energy transition framework for 2030, which is based on the following priority areas: (1) development of national hydrocarbon resources; (2) strengthen the refining, transporting, and distributing petroleum products; (3) development of electricity production and strengthen interconnections with different countries; and (4) Integration of 30 percent renewable energy by 2030 and reducing the demand for primary energy by 30 percent using energy efficiency techniques. As part of the Paris Agreement, Tunisia also submitted its

Nationally Determined Contribution (NDC) pledges to reduce its carbon intensity by 41 percent by 2030. Achievement of this climate objective depends on the implementation of its energy transition strategy, as the energy sector accounts for 75 percent of the mitigation potential. Although energy stakeholders have prepared detailed action plans to accomplish these goals, implementation has been slower than anticipated.

The Power Tunisia Project aims to assist Tunisia meet the fourth priority of the Energy

Transition Plan by working with the Ministry of Energy, the Tunisian Company of its

Electricity and Gas (STEG), the National Energy Management Agency (ANME), and other key stakeholders to explore innovative methodologies to reduce losses, to pilot advanced technologies to achieve renewable energy (RE) and energy efficiency (EE) goals, and to strengthen the foundations of a new regulatory authority.

C.3 THEORY OF CHANGE

The activity’s theory of change is that improved sector performance, diversified energy sources, and a stronger regulatory framework will help Tunisia achieve its renewable energy and energy efficiency goals. As the energy sector becomes more financially sustainable, more energy secure, and less dependent on foreign governments, Tunisia will move forward on its journey to self-reliance. More specifically, by diversifying its electricity mix to include new renewables, diversifying the sources of its natural gas supply, and reducing its energy costs through energy conservation, Tunisia will improve its energy trade balance. These measures will mitigate the considerable downward pressure on foreign-exchange reserves from the energy deficit which in turn will make it more feasible for the Government of Tunisia to liberalize access to foreign exchange by the private sector and encourage private investment in the sector.

To achieve its goals, the Power Tunisia Project will partner with key government stakeholders as well as leverage the knowledge and innovation of the private sector to deploy new technologies, expand the Tunisian smart grid, and help lower the cost of electricity for consumers. The theory takes into account a number of critical assumptions and risks. Major assumptions include: that by the time this activity is awarded, the current public health crisis would allow for the achievement of the stated objectives; that the Activity is able to effectively partner with the key government stakeholders and the private sector; that the renewable energy procurement programs move forward and are able to reach capacity targets; and that STEG is able to reduce commercial losses. A major risk to implementation is that the long-term economic fallout from the pandemic compounded by earlier contractions in GDP reduce the financial position of the utility which could make loss reduction goals harder to achieve. This risk can be mitigated by supporting STEG in modernizing the energy system and its operations. A different implementation risk is the energy sector developers fear of not getting paid for their investments due to unfriendly business policies. This risk can be mitigated by working directly with STEG on its bankability as well as help ensure that the policy and regulatory environments are business-friendly and safe for investment.

C.4 OBJECTIVES AND EXPECTED RESULTS

Tunisia’s energy system requires comprehensive and progressive reform. Tunisia has already started this reform through its Energy Transition strategy and dedicated action plans by setting targets for increased integration of renewable energy in the country’s electricity mix. Achieving these transition objectives requires a long-term, coherent, and integrated national vision to gradually transform the energy system to meet the requirements of energy security, economic competitiveness, social equity, and protection of the environment. USAID’s energy activity builds on Tunisia’s Energy

Transition plan through the following objectives:

1. Strengthening Sector Performance

2. Diversifying and Securing Supply

3. Promoting Advanced Energy Systems

General descriptions of the development challenges under each objective listed above, including activities and results, are described in more detail below. A comprehensive assessment of the Tunisian energy sector was conducted for this project and will be made available to all Offerors.

C.4.1 Strengthening Sector Performance

C.4.1.1 Utility Modernization

Challenges in the financial and operational performance of power utilities hinder private sector investment, limit expansion of electricity service, and create significant fiscal burdens. Strengthening the sector’s performance and its reliability requires modern utility systems. Such modernization efforts include the reduction of technical and commercial losses, integration of technological improvements and efficiencies, and adoption of efficiencies, best practices, and organizational changes.

According to the World Bank’s study Shedding Light on Electricity Utilities; Tunisia’s commercial losses had the third highest impact on its GDP when compared to the electricity losses of fourteen Middle East and North African (MENA) countries. These losses include 8 percent technical losses and 10 percent commercial losses. It is therefore important to identify the sources of technical losses and subsequently recommend and possibly procure appropriate equipment to reduce these losses and improve the reliability of service over time. An improvement in quality of service will reduce incentives for nonpayment. In addition, high commercial losses can be mitigated through the adoption of Human Resources practices, customer regularization training, metering (pre-paid meters, Automated Meter Reading (AMR), and wireless technology for credit purchase and management), theft reduction training, and focusing on low-income and female consumers who may need specialized assistance. Integrating technological improvements and efficiencies into Tunisia’s electricity grid will provide significant cost savings, further reducing incentives for non-payment.

STEG has also not yet modeled the impact of smart meters and other advanced technologies, such as renewable energy technologies, that may impact the reliability and management of the grid. This activity will include helping Tunisia create a digital lab to pilot the interplay of new technologies in a safe environment before recommending installation on the grid. An example of a potential digital lab could be National

Renewable Energy Lab’s Energy Systems Integration Facility (ESIF) where researchers can mirror real-world conditions and evaluate complex scenarios in a controlled laboratory setting. The project may draw on predictive analytics and artificial intelligence in the implementation of this digital lab. Taken together, these efforts will help to efficiently bring on new generation, reduce technical and commercial losses, and assist STEG to adopt efficiencies, best practices, and organizational improvements to improve the reliability and security of the electricity system.

Organizational changes are needed in order to improve the reliability and security of the electricity system in Tunisia. As of today, STEG has not financially valued its generation, transmission, and distribution systems assets. The utility is currently performing a financial accounting exercise to evaluate its generation, transmission, and distribution assets and the project can help with this exercise and any training or implementation that arises to improve the financial viability of the utility. Should STEG move to separate any of its core functions, the project can help build the technical, institutional, and human resource capabilities of the new organizations and recommend innovative, global best practice models applicable to Tunisia.

Expected Results:

● Commercial losses reduced through targeted training to the utility

● Smart meters installed to help improve customer satisfaction and payment and reduce commercial losses

● Digital lab developed that enables STEG to safely model the impact of new technologies

● Financial accounting exercise that provides better visibility to STEG on its assets

● Customer meters mapped and customer information system populated

● Efficient distribution equipment installed to help target distribution loss reduction

C.4.1.2 Regulatory Authority Support

As private developers of renewable energy emerge, creating a regulatory authority has become a priority to help foster an attractive and transparent climate for investors in

Tunisia. ANME, with the assistance of the United Nations Development Programme

(UNDP), has carried out a series of studies which included an evaluation of the current institutional and regulatory framework, a benchmark report comparing Tunisia’s regulation and arbitration of the renewable electricity sector with relevant foreign experiences, and a proposal for an institutional and legal framework for the mechanism.

These three studies led to the preparation of a draft law to set up an independent regulatory authority for the electricity sector in Tunisia and may eventually lead to the law’s adoption.

At this early stage, it is not yet clear what assistance the authority would require, but generally new regulators are in need of significant assistance in order to form the organizational structure of the agency, recruit and hire staff, build up their capacity to issue tariff orders, regulate the sector particularly with regard to the new renewable energy IPPs, and be exposed to global best practices from regulators around the world.

It is also possible that the regulator will need specific support on a cost of service study.

Expected Results:

● New regulatory authority assisted with the development of a staffing plan, budget, and organizational structure.

● International best practices on regulatory fundamentals and emerging regulatory issues shared.

● Capacity of the new regulatory authority strengthened

C.4.1.3 Catalyze Energy Efficiency Market Transformation

Tunisia is considered a pioneer and leader among MENA nations in the implementation of energy efficiency (EE) policy. The country continues to intensify energy efficiency efforts to meet the country’s NDC commitment and to reduce primary energy demand by 30 percent by 2030. This ambitious goal is further disaggregated per sector as follows: energy consumption reduction of 15 percent in buildings, 8 percent in industry and 7 percent in transportation. Decision makers and end users are paying greater attention to investments in energy efficiency, since electricity and fuel costs continue to rise. The Tunisian government has developed a solid regulatory base with sound financial incentives to build on and scale up energy efficiency. In 2005, Law N°2005-106 introduced the National Fund for Energy Conservation to finance energy efficiency, renamed the Energy Transition Fund in 2013 to emphasize its role in the energy transition strategy. The Fund collects money mainly from the tax on a car’s first registration, tax revenue from duties on import or the local production of air conditioning appliances, and tax revenue on incandescent light bulbs.

Growth in peak load represents a significant challenge in Tunisia and will require adding new capacity onto the grid over the next 20 years. The increasing use and market penetration of air conditioning in Tunisia is a major driver of electricity demand growth.

Appliance energy efficiency standards for air conditioning and refrigerators were last updated in 2012 and are ripe for revision. There is a need for more stringent energy efficiency equipment and appliance standards which can greatly reduce the need to meet rising demand if enforced appropriately and which represents a significant opportunity for energy savings in Tunisia. Energy Demand Planning integrates energy efficiency and demand response (DR) into national power development and integrated resource plans, enabling targets to achieve national strategic goals. Demand response can provide significant value to the power system, but barriers associated with DR deployment must be overcome in Tunisia. Power Tunisia can partner with innovative technology providers to strengthen energy demand planning and to reduce peak load.

Municipalities are a driving force in the implementation of local measures to improve energy efficiency. Although strong building energy codes are one of the most effective and affordable approaches to advancing energy efficiency in buildings, the energy savings are only realized when the codes are enforced and coupled with penalties for noncompliance. Enforcement remains a challenge in Tunisia. Moreover, according to the U.S. Green Building Council, Tunisia only has one certified Leadership in Energy and Environmental Design (LEED) building. There is a need for energy efficient planning and design to be applied to the built environment to raise the profile of green buildings as local and national priorities. The project can work with local government units to improve resident’s quality of life with better quality buildings and stretch existing electricity resources. The project can share lessons learned with other local governments and national decision-makers to integrate acquired local knowledge into the national policy dialogue. Tunisia's industrial sector has been a frontrunner in the implementation of energy efficiency among developing economies. Mandatory energy audits, coupled with financial incentives, are in place for large energy users but monitoring and verification could be strengthened. Tunisia should seek to comply with the ISO 50001 standard on energy audits. However, as the number of energy audit program contracts has stagnated, the potential for large energy savings remains untapped. The project should address the lack of investment in energy efficiency by large energy users, accelerate implementation, and help set energy savings targets.

Expected Results:

● Regulations and energy efficiency standards of NDC revised.

● Incentive programs and enforcement strategy developed to move markets toward more energy efficient products.

● Energy efficiency and demand response integrated into national energy planning, and integrated resource plans, to help achieve national strategic goals.

● Localized green building pilot programs established and staff trained

● Updated building codes implemented with strong focus on energy efficiency.

Penalty and fee structures developed, commensurate with building size and severity of violation of penalty. Fees collection method developed using a simple and effective penalty delivery and collection method.

● Knowledge-sharing platform created with specific sub-sectoral level energy management tracking tools, guides, and energy savings monitoring programs developed for key industries such as: cement; brick; textiles; chemical; and food.

Industrial energy productivity and competitiveness improved. Successes and high achieving firms formally recognized.

C.4.2 Diversifying and Securing Supply

C.4.2.1 Renewable Energy

Tunisia’s current electricity mix includes only 3 percent renewable energy generation.

The Tunisian Solar Plan aims to help mitigate this risk by achieving 30 percent of RE in the electricity mix by 2030. To implement the plan, the Tunisian authorities created three regimes to scale-up renewable energy: self-production, authorization, and concession. Several years later, the Tunisian government adopted an action plan aimed at accelerating RE projects and making it possible to increase the total capacity from

1,000 MW to 1,840 MW. The summer 2019 concession auction received world class prices for 500 MW of solar photovoltaics. These projects’ completions could pave the way for the successful development of many additional RE projects in Tunisia.

However, most of these concession projects have not progressed in the development cycle. Implementation of the authorization regime has also been slow due to a widespread perception that the Power Purchase Agreement (PPA) is not bankable. This is due to the PPA’s lack of a sovereign guarantee among other key concerns. Finally, implementation of the self-production regime has only just begun with the first set of guidelines released through decrees in 2020.

This work could include support for both solar and wind projects. Wind is nascent and has not yet been procured under the concession regime. Barring a conflict of interest if this RFI activity is not also advising the government, this work could

● assist bidders in reaching financial close and/or

● connecting them with financing and services offered to U.S. developers through agencies such as the Development Finance Corporation (DFC), the U.S. Trade and Development Agency, Department of Commerce, and Export-Import Bank;

or

● connecting them with financing through multilateral development banks.

Under the self-production regime, the project could help the government to design a balanced policy and regulatory framework that will help to achieve the government’s objectives while also creating bankable and attractive project prospects to the private sector. The activity, for example, could help private companies to form Special Purpose

Vehicles (SPV), navigate the application process, and connect them with financing and expertise to reach operational status.

While Tunisia has installed an impressive 72 MW of distributed solar generation under all voltage levels (both residential and commercial), the Ministry of Energy, STEG and

ANME might need additional support on the technical impact of residential solar systems to the distributed grid, as the footprint expands. In addition, distributed PV is still a newer technology and the compensation mechanism for consumers is not yet fully defined.

As the projects from these three regimes plus the subsidized residential distributed projects come online, STEG will need assistance to integrate the many gigawatts of renewable energy into its electricity grid. It is essential to plan for and manage the variability and intermittency of renewable energy. It is important to undertake a grid integration study that could include some or all of the following three key elements: 1) study planned generation and transmission capacity through expansion planning modeling, 2) weigh the economic costs and operational changes needed of various future supply portfolio options through production cost modeling, and 3) assess the operational impact of one of these portfolio options to the system through an indicative power flow study.

The results of this set of studies can inform and prioritize possible other grid integration activities. For example, STEG may need to:

● improve forecasting of renewable energy power plants,

● introduce flexibility to natural gas plants,

● study the effects of increased non-synchronous generators in the area of voltage quality, sub-synchronous resonance, harmonics, and oscillations,

● deploy Automatic Generator Control, or

● the effect of the introduction of new technologies such as distributed generation and energy storage on the grid.

After completion of the grid integration study, the project can identify one or more technology pilots on any of these topics to work on with STEG or may choose to partner with a private sector partner interested in piloting its technology. The project may also partner with multilateral development banks present in Tunisia. Along with its partners, the project can access the economic, technical, and financial aspects of the technology pilot. Pilot projects should be considered at all voltage levels.(This technology pilot can also fall under the smart grid activity if applicable).

Expected Results:

● Grid integration studies and analysis completed

● Renewable technology pilot developed or supported in partnership with other organizations

C.4.2.2 Natural Gas

Tunisia’s Energy Transition Strategy was partially driven by the decline in the national production of hydrocarbons. To support further energy diversification, the Tunisian government is working on an amendment to Tunisia’s hydrocarbon code. The new code is expected to be more attractive to investors and to include a chapter on non-conventional energy resources. Protests over jobs and labor issues have resulted in social unrest that halted production or shut the fields of two foreign energy companies in central and southern Tunisia. Internationally recognized standards to enhance health, safety, environment, and sustainability performance need to be updated in the natural gas sector. International equipment standards are not currently met for operations and maintenance which has led to declines in performance.

Energy security is a major concern in Tunisia due to the country’s gas contract with

Algeria and lack of diversification of natural gas supply. However, advances in technology, such as Floating Storage Regasification Units (FSRUs) and Small Scale

LNG (SSLNG)2 provide an opportunity for Tunisia to access more suppliers and require less infrastructure investment than traditional onshore LNG import facilities. The advent

2 U.S. Department of Energy, 2018. “Global LNG Fundamentals.”

of FSRUs has significantly lowered the threshold for introducing LNG to new markets.

Tunisia is currently studying the viability of FSRUs and further technical analysis is needed to identify the market potential for FSRU and/or SSLNG.

Power Tunisia can partner with the U.S. private sector, ETAP, and STEG, on a series of dialogues on technical topics pertinent to the natural gas sector in Tunisia including technical standards, supply diversification, and advanced technologies.

Expected Results:

● Enabling environment strengthened, leading to market-based solutions, and growth in private sector energy opportunities for business development in

Tunisia.

● Technical training delivered by industry partners to support data-driven, informed decision-making to enhance energy security.

● International best practice guidelines on Community Engagement shared. Long term strategic plan developed to foster safe and responsible development of

Tunisia’s oil and natural gas resources, through collaboration and engagement with the communities where operations occur, to reduce social unrest and advance social development goals.

● Innovative partnership models developed to mitigate commercial risks and align business interests for potential FSRU and SSLNG development. If/where feasible, key infrastructure needs identified to enable rapid deployment.

C.4.2.3 Pilot Activities

The construction sector is a major contributor to employment and local economies.

Tunisia’s construction industry recovered in 2018, and registered a growth rate of 1.0 percent in real terms, following a contraction of 1.8 percent in 2017. This recovery was driven by positive economic developments, a revival in investor confidence and investments in transport infrastructure, energy and housing. Expansion in the tourism and manufacturing sectors also supported the industry’s growth. The total construction project pipeline in Tunisia, including all mega projects with a value above US$25 million stands at TND 46.6 billion (~US$18.3 billion).3

A new era of building design and construction includes measures that result in better indoor environments, saves money, and reduces impact on natural resources. Building certification and rating programs provide recognition for a building’s efficiency or sustainability. There are numerous green building certifications in use around the

3 Sandler Research.“Construction in Tunisia – Key Trends and Opportunities to 2023.”

world.4 These voluntary programs can have a transformative effect on the buildings market and incentivize building owners to improve building design and performance.

The development of net zero energy buildings (NZE) have evolved with construction technologies and techniques. They continue to advance with academic research on traditional and experimental buildings as precise energy performance data is collected and studied. Today's advanced building energy use modeling that can not only accurately demonstrate the efficacy of engineering design decisions, but more importantly, can help inform the design process for the best possible outcome in exploring different options by utilizing an integrated design approach. As the green design field has matured, performance data has demonstrated that when first costs of green buildings are considered with direct energy savings, a green building costs less than a conventional building. One of the major barriers to designing and constructing green buildings in Tunisia is the general public perception that they are cost prohibitive.

In fact, many studies have shown that NZE buildings can be delivered either at equal cost of a traditional building or marginally more expensive with extremely quick Return on Investment on any added cost.5

Local government buildings and education facilities can provide excellent platforms for demonstrating examples of: design methods; cost and financing models; contract processes; and effective and adaptable management strategies. Leadership by example fosters educational opportunities, establishes viability, market development and lends credibility to related policy efforts. Although new buildings present significant opportunities for the most energy savings per building, existing buildings represent a greater opportunity for energy savings overall. Energy efficiency retrofits can drastically reduce operational costs, particularly in older buildings, but are often overlooked as an area for potential cost and energy savings without targeted programs, analysis, and thoughtful incentives.

The transformation of the building sector toward NZE will also require close collaboration with utility incentive programs, rate structures, and distribution network planning. While the PROSOL-ELEC program has made progress in increasing distributed solar solutions on residential buildings, the program’s support covering tertiary buildings is very new and the uptake is not yet large. In partnership with

PROSOL-ELEC, there could be opportunities to increase the use of distributed solutions on public buildings and through the use of innovative public-private partnerships to demonstrate the benefits of emerging technologies. Partnerships that included government, private-sector and civil society stakeholders can help showcase

4 National Institute of Building Sciences. 2014. “Green Building Standards and Certification

Systems.”

5 New Buildings Institute 2012. “Getting to Zero.”

https://www.wbdg.org/resources/gbs.php https://www.wbdg.org/resources/gbs.php building efficiency policy best practices and advance the development and adoption of high-performance buildings. Thus, following appropriate energy audits to understand the potential for energy efficiency improvements, Power Tunisia can explore options for the solar electrification of public sector buildings and public-private partnerships as part of a menu of options to increase the energy efficiency of buildings.

In addition, the procurement of electricity equipment will support the other Power

Tunisia objectives. To support Power Tunisia’s work on improving sector performance to reduce technical and commercial losses, the project may consider the procurement and/or installation of infrastructure needed to reduce losses. Illustrative examples are given below. In order to support Power Tunisia’s work on scaling up renewable energy and advanced technology adoption, the project may also need to procure and/or install generation infrastructure for its technology pilots.

To support this effort, the project may consider supporting some or all of the suite of activities below:

1. Assessment of new buildings: In collaboration with the Government of Tunisia and

USAID, the project could assess and identify a list of near-term, new build plans to integrate best in class energy efficiency improvements. Power Tunisia can also assess companies that have already planned some new construction and work with them to construct buildings that meet internationally recognized standards instead. Power

Tunisia could analyze the energy efficiency improvements required to achieve a standardized, internationally recognized, high-performance green building or NZE standard. Interventions also include infrastructure that is required to meet this goal. The analysis could include identification, design, procurement and installation of improvements to reduce the energy use intensity in buildings such as but not limited to high efficiency HVAC systems, high efficiency lighting, windows with film or shading to reduce solar heat gain and advanced metering and monitoring, etc.

2. Retrofits for Existing Buildings: In coordination with the Government of Tunisia, the Implemeter could carry out a portfolio-wide analysis of existing municipal building stock and also identify the best opportunities for NZE and/or deep energy retrofits for existing buildings. Upon approval from USAID, the analysis could be followed by design, procurement and installation to equipment and non-structural buildings rehabilitation to achieve and contribute to the energy enhancement goals of the program.

3. Solar PV for Buildings: Solar photovoltaic (PV) solutions on the distributed grid and behind-the-meter installations are becoming more widespread in Tunisia due to the

PROSOL ELEC program which offers an investment subsidy for residential consumers and public and private establishments in the tertiary sector. On the medium and high voltage level, the compensation framework for solar PV is still being developed but new guidance was released in the beginning of 2020. In coordination with the Government of

Tunisia, the Implementer shall identify opportunities, design and carry out the installation of PV solutions. In concert with installing solar PV solutions, the Implementer could work one-on-one with recipient entities to familiarize them with technical, legal, and financial aspects of solar PV or to provide youth education around renewable technologies in the case of underserved communities. Some possible categories include:

● Government and municipal buildings in major cities to demonstrate the technology

● Public-private partnerships for technology demonstration

● Soccer fields or venues, particularly in underserved communities that might not otherwise receive project assistance

● Waste and sanitation infrastructure in partnership with ONAS (waste sanitation agency) to lower their electricity costs

● Other locations as identified

4. Biomass Pilot Projects: In Tunisia, biomass has mainly been used for methane fermentation technology for the production of biogas from animal and plant waste and also from wastewater in sanitation stations. Broadly, these technologies have failed to reach large-scale adoption in Tunisia. The Tunisian government has supported biogas production through financial grants from the Energy Transition Fund and project development through the Office des Terres Domaniales (OTD), which regulates agricultural livestock, and the National Sanitation Office (ONAS), which oversees wastewater treatment. Since 2017, the Energy Transition Fund has provided biogas production projects with financial assistance for 30% of the total project investment with a designated ceiling. The project could help this technology reach scale by:

● Partnering with research institutions or universities to study biomass and develop pilot biomass projects for research and development purposes

● Partner with ONAS or OTD to support the development of pre-identified biomass projects with financial and technical resources to move the projects towards operation. The project can also construct projects if needed.

5. Electricity Equipment Installation: In coordination with the Government of Tunisia, Power Tunisia can identify opportunities for either procurement or procurement and installation of equipment to reduce losses, manage peak demand, and promote the adoption of clean and low cost technologies. In concert with procuring and/or installing this equipment, the Implemeter could work one-on-one with recipient entities to educate and inform them on the technical, legal, and financial aspects of the equipment so that they can procure it in the future, if needed. Illustrative examples of this potential equipment are:

● Partnering with innovative technology providers to design smart energy efficient devices such as cooling storage and super-efficient district cooling solutions

● Distribution infrastructure and equipment to help reduce losses, such as ICT systems, meters or capacitors

● Generation infrastructure for technology pilot programs such as lithium ion batteries

Expected Results:

● Local partners included in the design, construction, operation, and verification of identified municipal building(s).

● Pilot projects are operational and are used to showcase opportunities for the development of ambitious net-zero energy buildings and national targets for

Tunisia. Case studies developed to educate students and key stakeholders.

● Energy codes and policy approaches driving towards zero energy and/or zero carbon new buildings and deep emission reductions for existing buildings are developed.

● Networking groups established and convene regularly to promote innovative technology, advanced design practices, and to drive public policies and programs in the design and construction of energy efficient buildings. Tools and guides shared among industry market players including: national and local governments, utility, and building professionals.

● Solar PV installed on public buildings reduces building electrification bills

● Biomass pilots studied and constructed

● Pilot projects to reduce peak electricity demand and technical losses are operational. Energy performance is monitored.

● Technology pilots are operational and contributing toward national energy goals.

C.4.3 Advanced Energy Technology and Innovation Mechanism

The Implementer shall engage the private sector in the development and implementation of innovative solutions that contribute to the activity’s goals and objectives with the review and approval of the Contracting Officer and the Contracting

Officer's Representative. This fund is envisioned to secure meaningful partnerships and mobilize private capital and expertise from local and international private sector stakeholders in support of the activity’s objectives, and should not solely be used for a

Grants under Contract approach. The Implementer must use the Project Fund to maximize private sector participation using innovative approaches.

The use of the fund should follow the safeguards and principles below:

1. Clear and transparent criteria and procedures. These must ensure broad participation in communicating, reaching, and responding to opportunities and best practices in managing expectations, selecting partners, making funding decisions, and assessing impact.

2. Catalytic Impact. To showcase outcomes that can accelerate private sector growth in the absence of U.S. Government assistance, Implementers must apply market-based approaches that advance business interests, seek additionality, introduce innovation, facilitate risk management, and expand development impact, among other critical elements. These approaches can include pilot interventions in support of the objectives of this award.

3. Leverage. Defined as in-kind or cash contributions from partners, leveraging is required, while cost-sharing is not. Implementers must seek and secure partnerships that leverage the necessary expertise and capital in support of the

Contract objectives. This includes approaches that seek to achieve a justifiable balance between development and commercial outcomes, and does not include one-sided interventions for development gains in the absence of commercial sustainability or vice-versa. The Project Fund may support a public good or service with limited or no leverage when there are direct and tangible benefits for

Tunisian businesses and entrepreneurs.

4. Crowd-in the private sector. Approaches must incentivize broad private sector participation and avoid market distortions that substitute or displace the private sector. In cases where there is limited or no private sector leverage, Implementers could use the Project Fund to pilot and scale private sector interventions. These types of interventions must be widely disseminated as case studies regardless if they prove to be commercially viable or not. These include but not limited to introducing new technologies, business management systems, virtual training and mentoring, on-line marketing or other firm- or sector-level support when the business model is untested or perceived as too risky for commercial finance. Moreover, these cases could include early growth phases of new, untested or innovative business models for tourism products and services.

Possible approaches: To achieve this objective, the implementer should propose approaches and activities they believe will achieve the objective such as:

● Partnering with NGOs or industry associations to train young adults on the installation of renewable energy equipment and energy efficiency audits

● Partnering with engineering or architecture schools to develop high quality engineering, energy policy, and architecture undergraduate, graduate, and/or certificate coursework on clean and renewable energy and energy efficiency topics

● Partnering with private sector on the development or construction of renewable energy technology pilots, for example, to demonstrate cutting-edge technologies and their applicability for the Tunisian electricity system

● Partnering with private sector equipment manufacturers and importers to drive energy-efficiency market transformation production through the sale of smart, energy efficient devices for the Tunisian market such as super efficient air conditioning to reduce peak demand

● Demonstrating net zero energy buildings to promote clean and efficient technologies

● Helping form and connect SPVs under the self-production regime to the technical, financial, and policy assistance they might need to succeed in the regime

● Helping local Tunisian companies and SMEs reduce their energy costs and increase their revenues through advisory and technical assistance

● Training the private sector on best practices for local community development in gas sector to promote social inclusion

● Matchmaking private sector U.S. or international gas companies with government stakeholders and facilitating educational exchange on topic of FSRUs

C.5 RELATIONSHIP TO MISSION AND AGENCY STRATEGY

The activity aligns with USAID Tunisia’s economic growth Development Objective (DO)

1: “Inclusive Private Sector Employment Increased”, Intermediate Result (IR) 1.1:

“Private Sector Competitiveness Increased,” and IR 1.2: “Improved enabling environment for Private Sector Growth.” DO 1 is driven by the need to promote inclusive, private sector-led growth that will reduce unemployment and contribute to

Tunisia’s long-term socio-economic transformation.

This activity also supports USAID’s Journey to Self-Reliance (J2SR) Country Road Map for Tunisia, which highlights the need to improve economic inclusion of the different segments of society. It also supports USAID’s 2019 Private Sector Engagement (PSE)

Policy and USAID/Tunisia’s PSE strategy, assigning a leading role to the private sector as a critical pathway to self-reliance. Specifically, the PSE policy signals an intentional shift to pursue market-based approaches and private sector investment and expertise as a means to accelerate Tunisia’s progress on the J2SR.

C.6 IMPLEMENTATION CONSIDERATIONS

Implementing partners must consider the following:

C.6.1 Digital Strategy, Innovation and Technology

Making intelligent use of data is critical to ensure actions are coordinated, properly valued and aligned with Tunisia’s decarbonization and digitization goals. The

Implementer must include sustainable digital solutions for the delivery of services and technical assistance to beneficiaries, partners and sub-contractors that allow for real-time, adaptive management, and digital feedback loops. Implementers shall likewise propose cost-efficient information technology solutions for electronic data collection, performance monitoring and evaluation, and reporting to inform implementation.

The Implementer must also address innovation in its approach. The energy sector offers fertile terrain for innovation, spanning technology, new ways of delivering services, cost-effective adaptation of existing solutions, sophisticated approaches to accelerate or scale the implementation of proven solutions and policy changes. Digital technologies allow companies and decision makers to collect and manage data more effectively and can result in reduced operating expenses and higher profits. These platforms help utilities optimize their processes, meet compliance requirements more effectively, make better predictions, introduce products and services, and improve existing ones. The

Implementer may consider efforts using digital technologies to deepen customer engagement and improve customer service practices, improve asset management by scheduling maintenance using predictive analytics, or improve technical instruction by equipping field workers with mobile devices and accessibility. Utility digitalization strategies, in parallel with workforce development training, can also provide new opportunities for women and youth. To fully utilize digital platforms, partnerships are key, especially ones that bring businesses to the table with governments and international organizations.

C.6.2 Infrastructure Activities

In support of the objectives of this activity, the Implementer should specify the approach and methodology to implementing construction, upgrades or rehabilitation activities that ensures that USAID/Tunisia alleviates inherent construction risk by incorporating the principles of ADS 201.