Innovative energy policy in a developing country context: experiences from UNEP's PROSOL initiative

Abstract

AbstractAs is the case in several other countries of the Middle East and North Africa region, fossil energy resources have long dominated Tunisiaʼns energy sector. However, concerns about depleting fossil fuels, rising prices, and growing demand have driven interest in the countryʼns substantial but largely untapped solar energy resources. In 2005, the Tunisian government, with the support of the United Nations Environment Programme, launched PROSOL, an innovative financing scheme to revitalize an anemic solar water heater (SWH) market. PROSOL has been a resounding success, which has spurred similar policy initiatives in neighboring countries. On the basis of in‐depth reviews of project progress reports, external evaluations, and stakeholder interviews, we analyze Tunisiaʼns experience with the PROSOL initiative with a view to extracting practical lessons that might inform replication in other developing countries. Drawing on the concept of a technological innovation system (TIS), we isolate and address key questions including: why and how public and private agents may either support or hamper a given technological innovation; and how, in the Tunisian case, new SWH interest groups and networks emerge around new technology initiatives such as PROSOL. Our findings highlight the central role of public policy in removing barriers to the market diffusion of proven renewable energy technologies. In the Tunisian case, the establishment by law of a substantial capital cost subsidy while exempting SWHs from value added tax and decreasing custom duties enabled SWH systems to compete effectively against conventional energy sources such as natural gas or liquid petroleum gas. The study also confirms the importance of capacity building, buttressed by an effective communication and outreach strategy, targeting key actors including government policy makers, the national utility, financial institutions, and SWH vendors.This article is categorized under: Energy Policy and Planning > Economics and Policy Energy and Development > Economics and Policy Energy and Development > Systems and Infrastructure