Salvatore Moretta Italian Ministry for Environment Land and Sea

1. 3rd MEDREG-IMME SeminarReform and Opening of Maghreb Electricity MarketsTunis, 11-12 September 2013 Salvatore Moretta Italian Ministry for Environment Land and Sea Mediterranean Centre for Renewable Energies, Tunis Energy cooperation for the introduction of support schemes for distributed renewable energy production in the Northern African Region: analysis of MEDREC experience

2. 3rd MEDREG-IMME Seminar The Mediterranean Renewable Energies Centre The Mediterranean Renewable Energy Centre (MEDREC) is a regional centre for training, information, dissemination, networking and development of pilot projects in the Mediterranean Region in the fields of renewable energies and energy efficiency, established in Tunis in 2004 and founded by Italian Ministry for Environment Land and Sea (IMELS) The MEDREC is the focal point for Mediterranean Renewable Energy Program (MEDREP) activities in North Africa

3. 3rd MEDREG-IMME Seminar The Financial Instrument: MEDREP finance The Mediterranean Renewable Energy Program (MEDREP), is an initiative promoted by IMELS in partnership with the United Nations Environment Programme (UNEP) aiming at developing a sustainable renewable energy market system in Mediterranean and Balkan regions, removing project, policy and trade barriers and strengthening the market system, thus contributing to climate change mitigation. The IMELS has already provided a financial contribution amounting to 10 million USD to test different options to increase available financing for renewable energy and energy efficiency systems in Morocco, Egypt, Tunisia, Macedonia and Montenegro

4. 3rd MEDREG-IMME Seminar MEDREP finance: Main objectives • Support the demonstration, deployment and diffusion of renewable energy technologies • Support renewable energy markets, defining appropriate policies and financial instruments for supporting investments • Strengthen the institutional framework towards a common Mediterranean Energy Policy

5. 3rd MEDREG-IMME Seminar MEDREP finance: Ongoing Projects • In Egypt, EGYSOL targets the hotel sector to install SWH systems through a combination of subsidies, awareness raising and training workshops, and by establishing quality standards for SWH suppliers • In Montenegro, MONTESOL is allowing local banks to finance SWH end-users through preferential terms such as low-interest loans. • In Morocco, • MEDREP is helping to transform the market for energy efficient lighting, paving the way for phasing out incandescent lighting • IMELS is negotiating with local authority a first net meteringpilot mechanism for tertiary sector for grid injection of the electricity produced in the framework of Casablanca Solar Hospital project (PV + SWH + Solar Cooling) • In Tunisia: The “PROSOL family” • PROSOL (SWH in residential sector - 2004->2008) • PROSOL Tertiary (SWH in hotel sector - 2009-> ...) • PROSOL Industry (SPH – 2009 -> ... ) • PROSOL Elec (PV in residential sector – 2010 -> 2012)

6. 3rd MEDREG-IMME Seminar Oil subsidies: a barrier to ss RE production deployment Despite having set very ambitious renewables targets for domestic markets, most MENA countries are still lacking a comprehensive renewable energy strategy, which would address support for renewable energy in the long-term. Apart from public tendering for large-scale wind and solar power projects, there is no effective support scheme that would provide a strong incentive for investments in small-scale projects. Lacking support schemes, fossil fuel subsidies distort the economic of REEE technologies determining sometimes insurmountable upfront cost barriers. Keeping the price of fossil-based energy products low, makes renewable and efficiency investments less competitive. And it is regressive, with the wealthy benefitting the most. A recent IMF study of fossil fuel subsidies globally determined that the wealthiest 20 percent of the population gets a disproportionate 43 percent of the benefit from fossil fuel subsidies, while the poorest 20 percent gets only 7 percent. In fact, the poorest 60 percent of the population still doesn't get as much benefit as the wealthiest quintile. (Sources WB,IMF)

7. 3rd MEDREG-IMME Seminar A success case: PROSOL The Prosol Program launched in Tunisia in 2005 to support Solar Water Heater market represents a successful example of how the inability to directly phase out fuel subsidies can be addressed indirectly by shifting demand preferences. Prosol, in fact, prompted the Government to mandate by law, for the first time in Tunisia, a counterbalancing subsidy for REs, leading to a partial revision of the country’s energy subsidization system.

8. 3rd MEDREG-IMME Seminar The introduction of a support mechanism tailored taking into account specific local conditions with regard to the institutional, legal and market framework was crucial to the growth of a self-sustainable SWH market

9. 3rd MEDREG-IMME Seminar Despite increasing the overall State influence in the energy economics, this intervention actually reduced the total public fund disbursement.  Considering only the installations carried out in the first 5 years of the program, expectedsavings achievable in 20 years (2005-2025) amount to101 million US$, with a ROI of around 6 years for Tunisian Government. Public finance returns under the BAU scenario and fossil fuel “phasing out” scenario (Source: Climate Policy Initiative, San Giorgio Group Case Study: ProsolTunisia, June 2012)

10. 3rd MEDREG-IMME Seminar Prosol: Integration of Stakeholders Involvement INTERNATIONAL AID MEDREC IMELS UNEP-DTIE $ SAVINGS ENERGY SAVINGS POLICY GoT ANME STEG BANKS SUPPLIERS INSTALLERS HOUSEHOLDERS $ SAVINGS TECHNOLOGY END USERS

11. 3rd MEDREG-IMME Seminar MED-DESIREMEDiterraneanDEvelopment of Support schemes forsolar Initiatives and Renewable Energies Duration 36 months (January 2013 - December 2015) Budget • Total budget: € 4.655.007 • Programme contribution: € 4.191.306 (90%) • Project co-financing: € 463.701 (10%) Target groups • 5 central and 30 local administrations, institutions and agencies dealing with energy and environment • 2.000 SMEs, energy technicians and professionals • 10 financial institutions • At least 10 business support organisations, industrial districts and entrepreneurial associations Main activities • Benchmarking of national/regional policies and programmes focused on solar energy and energy efficiency • Analysis of current certification procedures for solar energy technologies in MPC and EU regions • Elaboration of recommendations and action plans for improving legislative and regulatory frameworks • Capacity building initiatives for solar energy technicians and professionals to ensure the quality of components and installations • Training sessions for policy-makers in charge of solar energy regulation • Elaboration of innovative financial and market stimulus instruments

12. 3rd MEDREG-IMME Seminar MED-DESIREMEDiterranean DEvelopment of Support schemes forsolar Initiatives and Renewable Energies • Partnership • PugliaRegion - Research and Competitiveness Service, IndustrialResearch and Technological • Innovation Office (Italy, Puglia) • ItalianMinistry for the Environment, Land and Sea (Italy, Lazio) • Italian National Agency for New Technologies, Energy and SustainableEconomic. • Development (Italy, Lazio) • AndalusianEnergyAgency (Spain, Andalucía) • Andalusian Institute of Technology (Spain, Andalucía) • CIEMA - SolarPlataform of Almeria (Spain, Andalucía) • The National Agency for Energy Conservation (Tunisia, Tunis) • Lebanese Center for Energy Conservation (Lebanon) • New and RenewableEnergyAuthority (Egypt)

13. 3rd MEDREG-IMME Seminar MED-DESIREMEDiterranean DEvelopment of Support schemes forsolar Initiatives and Renewable Energies IMELS will lead the WP6 of the project, aimed to the implementationof good practices in legal, regulatory, and economic issues including the promotion of new financing mechanisms to facilitate the take up of solar technologies in Egypt, Lebanon and Tunisia. First deliverables will be available in early 2014

14. WP6 Innovative financial schemes and market stimulation tools to spread energy efficiency and distributed solar energy technologies 6.2 Create the legislative, social and technical framework for introducing pilot solar ordinances in Mediterranean regions 6.1 Innovative financial schemes 3rd MEDREG-IMME Seminar MED DESIRE: WP6 Tasks Breakdown

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16. 3rd MEDREG-IMME Seminar The role of Political Committment A key factor for the successful deployment of REEE technologies at competitive cost-benefit ratios is the declared political commitment to systematically turn this technology into a major element of energy system. Governments need to adopt, in agreements with relevant stakeholders, strategies, policy targets, and support schemes that are visible, feasible, and effective, that create both sufficiently expansive markets to drive down costs by scaling up deployment, and sufficiently attractive business perspectives for industrialists. MEDREC is working to assist Mediterranean Governments to address perverse subsidy on fossil fuels to REEE promotion to improve energy security and reduce GHG emissions through simplified and effective support schemes tailored on local conditions.

17. Energy cooperation for the sustainable development of the Northern African Region Thanks for your attention!