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Let's take a hypothetical example of economic integration:

Algeria, wanting to reduce its dependence on imported coal, decides to install solar panels to provide electricity. Algeria does not possess the capacity to manufacture solar panels domestically, or the capability to build that capacity. So in order to obtain that capacity, they borrow a suitcase full of either US$ or € and hire a bunch of American, SE Asian or German engineers to build them their factories and train their workforce to use them. Why not engineers from Sub-Saharan Africa? Because they don't precisely have a surplus to lend out.

In order to repay the loan, they need hard currency. For sufficiently long amortisation times, they might be able to pay out of the ForEx savings from not having to import coal. But let's say that they want to get out from under the debt relatively quickly so as to not present a target to ForEx piranhas. So they want to sell some of the electricity that they produce. Who are they going to sell it to? The Americas? Russia? Good luck making that economical. The Middle East? The rest of North Africa? They have equivalent solar resources within shorter transmission range. Sub-Saharan Africa? They have superior resources within shorter transmission range. So they make a thirty-year take-or-pay contract with a Spanish utility that rolls out some HVDC cables across the Med.

Net results: Algeria gets electricity paid for by Spanish electricity consumers (and Australian coal miners). After amortisation is complete, Algeria also gets ForEx revenues that can be used to make other infrastructure projects happen that are beyond the technical capabilities of indigenous industry. Algeria gets indigenous solar panel production capacity. Spain gets solar power cheaper than than they would if they had to install the panels at their own latitude. Everybody gets to benefit from the displacement of coal power with solar power.

What, precisely, is wrong with this picture? (Except from the perspective of the Australian coal miners...)

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Aug 24th, 2010 at 12:45:47 PM EST
[ Parent ]
re: "What, precisely, is wrong with this picture?"

It's delusional.

The scenario is predicated entirely by the assumption that the only value of power generation to Algerians, for example, is the market value of surplus capacity, stock, and distribution ("Who are they going to sell it to? The Americas? Russia?"); and energy export is a prerequisite of "economic integration" signified by some amount of EUR reserves accumulated entirely as revenue share of exclusive marketing to EU customers.

That's your inner, patronizing imperialist speaking obliquely about the intractable problem of increasing energy consumption in Europe. This golem cannot conceive of an African nation obtaining project financing to acquire a discrete productive means and extinguish debt. It cannot conceive of any competitive supplier of plant and equipment other than the tools in its chest. Precious hates BRIC brac.

Do you know much wind capacity is actually installed in Algeria? Could you estimate much more renewable energy will Algeria require to (1) replace fossil fuel marked-to-OPEC (2) service its public and private sector population over 80 years or so? This last goal is the most important measure of civilization, by the way, beside industrial capabilities and excess manufacturing capacity, exemplified by Algeria's partners in "economic integration."

Some information is in the Desertec prospectus, for example,

In 2050, we envisage that the EU-NA power system will have a total electricity consumption of at least 5000 TWh/a, with approximately 25% of this demand in [ALL OF] North Africa and the remainer in Europe. In total, only 60% (3000 TWh/a) of the system-wide electricity supply is produced in Europe, whereas 40% (2000 TWh/a) is produced in [ALL OF] North Africa.


Diversity is the key to economic and political evolution.
by Cat on Tue Aug 24th, 2010 at 02:37:38 PM EST
[ Parent ]
I'm not quite clear on what you think is wrong with a 75/25 split in electricity usage between the present EU and North Africa. North Africa has pretty precisely 25 % of the population of the combined EU+NA system. So, ceteris paribus, we should expect it to have 25 % of the electricity usage. Maybe differences in demographics would tilt the population ratio to 70/30 in 2050, but that's still close enough for corporate work.

The fact that North Africa will have a greater share of electricity production relative to population in an EU+NA system than the EU is not so different from the fact that Italy, France and Spain have a larger share of EU wine production relative to population than Finland, Sweden and Norway. I'm sure that Finland could make fine wine, if they threw sufficient resources at the problem. But that would hardly be the smartest or the most elegant way to provide Europe with wine...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Aug 24th, 2010 at 03:22:34 PM EST
[ Parent ]
"project finance"?

Project finance is exactly what Jake described, and you actually could not get project finance in Algeria for a big investment project like he describes but based on local demand, because project financiers want to see high probability cash flows to be in a position to lend, and for some reason (European oppression, probably, they don't trust the locals to pay them back, and require export contracts backed by creditable parties to provide these.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Tue Aug 24th, 2010 at 06:08:11 PM EST
[ Parent ]
That and the fact that they usually demand €-denominated loans, which means that the project had damn well better have a €-denominated cash flow sufficient to retire those loans on schedule. Otherwise, you're setting yourself up for a currency crisis and the accompanying IMF euthanasia of your economy and political sovereignty structural adjustment program.

Unless, of course, one thinks that it's a brilliant idea to deliver developing countries into the waiting arms of an economic hit man.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Aug 24th, 2010 at 06:15:30 PM EST
[ Parent ]
If I may raise some more sceptical aspects: this picture would be nice, if it is realised like that. However,

  1. that needs Algeria to consciously follow its interests (and its leaders to resist bribes): for, another scenario would be that Siemens et al build multi-billion-dollar facilities but keep complete control of it, without tech transfer or ownership, and thus it's them selling both to Spain and Algeria even if they also pay rent for the desert land;

  2. I do think that Spain has enough solar resource (and a good one at that) to supply itself;

  3. I am not convinced that the Desertec plans are much more than greenwashing for the companies involved, that is: if realised, it may not grow beyond the scale of a few GW;

  4. Algeria is a bad example, because the government doesn't like Desertec.

Then again, I don't see how Desertec would bring EU integration any closer...

Finally, a nitpick:

Sub-Saharan Africa? They have superior resources

Actually, no: they may have a higher angle of the Sun in the sky, but clouds, too.



*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Aug 24th, 2010 at 03:14:12 PM EST
[ Parent ]
another scenario would be that Siemens et al build multi-billion-dollar facilities but keep complete control of it, without tech transfer or ownership, and thus it's them selling both to Spain and Algeria even if they also pay rent for the desert land;

Yes, that is another possible scenario. Our job as lefties is to make sure that's not the way it turns out.

I do think that Spain has enough solar resource (and a good one at that) to supply itself;

OK, point. I originally used Libya and Italy, but the fact that Libya has oil means that they have access to hard currency to fund the project without building new export infrastructure (ditto for Egypt and the Suez canal), which complicates the argument a little without adding anything substantial to the conclusion.

I am not convinced that the Desertec plans are much more than greenwashing for the companies involved, that is: if realised, it may not grow beyond the scale of a few GW;

I wasn't talking about Desertec specifically - rather, I was thinking a Gazprom-style sovereign utility on the African side and a Ruhrgas-style quasi-sovereign utility on the European side. That seems to have worked out well enough for Russia, and anything that could survive the Yeltsin years is surely a solid design. And solar power - particularly solar power for export via HVDC lines - is an infrastructure business in the same way that natural gas is: You can only sell the power in the places that you have power lines to, and the infrastructure represents a substantial up-front cost.

Unlike gas, however, it does not run out, so if you take good care of your infrastructure, you can keep using it essentially forever. Which in turn means that as soon as it is fully amortised, it makes free electricity in perpetuity (or until Sahara gets a cloud cover or the Earth's axial tilt changes - but in both those cases you'd have to reevaluate your business model for other reasons...).

Sub-Saharan Africa? They have superior resources

Actually, no: they may have a higher angle of the Sun in the sky, but clouds, too.

I was thinking about the Sahara here as well: From a pure production perspective, the smart way to power sub-Saharan Africa would be to start from the south end of Sahara and work your way North. And you'll run out of solar panels long before you reach the border.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Aug 24th, 2010 at 03:42:41 PM EST
[ Parent ]
Nitpicking your nitpick:

According to your map, Mauritania, Mali, Niger, Chad and Sudan, which are not usually seen as North African countries, are located in the maximum solar potential zone...

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char

by Melanchthon on Tue Aug 24th, 2010 at 03:43:22 PM EST
[ Parent ]
Nitpicking the nitpicked nitpick: I countered "superior", not "up to just as good" :-)

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Aug 24th, 2010 at 04:28:07 PM EST
[ Parent ]
I would really like to nitpick your nitpicking of my nitpicking of your nitpick, but the scale of you map doesn't allow it... ;-)

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Tue Aug 24th, 2010 at 05:16:00 PM EST
[ Parent ]
Use this!

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Aug 24th, 2010 at 05:23:49 PM EST
[ Parent ]
Thanks! Then Chad and Sudan are the winners... ;-)

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Tue Aug 24th, 2010 at 05:41:41 PM EST
[ Parent ]

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