Thu Jun 6th, 2013 at 04:12:34 AM EST
Desertec started ten years ago as a Club of Rome initiative to involve major energy companies in a project to build solar thermal power plants in North Africa to supply Europe with electricity. With the establishment of the Desertec Industry Intitiative (Dii) in 2009, it seemed closer to reality. At first glance, as a project relying on capital-strong companies to construct where the resource (sunlight) is the most plentiful, this seems to be a great contribution to the de-carbonisation of the EU electricity supply, while also providing development aid. I have long argued, however, that it can be none of that, more a distraction.
Clouds did begin to gather over the project in the past 12 months, with the exit of major technology project partners Siemens and Bosch, scaled-back export prospects due to grid issues, and increasing local opposition. And now Dii gave up on exports to Europe:
In a telephone interview with EurActiv, Dii CEO Paul van Son admitted that the project's initial export-focus represented "one-dimensional thinking".
Although the industrial alliance was set up to develop renewable energy supplies in the Maghreb to feed up to 20% of European electricity demand by 2050, Dii now concedes that Europe can provide for most of its needs indigenously.
The article continues with the actual quotes:
"If we talk about renewable energy from North Africa, only a small fraction will ultimately supply the European market," said van Son, adding that the European market could supply up to 90% of its own power demand.
"Frankly, four years ago Desertec was all about bringing energy from North Africa. We abandoned that one-dimensional thinking. It's now more about creating integrated markets in which renewable energy will bring its advantages ... That's the main objective," he said.
Let me re-iterate my bones of contention with the idea of power from the Sahara.
First, let's look at solar potential.
One half of this is whether we need the Sahara in terms of surfaces available for the deployment of solar collectors. There are studies on this; the crux of it is that there are still plenty of roofs and dump sites and abandoned developed sites and highway sound barriers and semi-desert areas to be covered even in areas in Europe where solar development is already strong (for example, in Baden-Württenberg state in Germany, still only 21% of suitable roofs is in use; rooftop potential estimates for all of Germany range from 116 to 161 GWp).
Another half is the yield one can expect at a site. Just how much better is North Africa compared to Europe? First a map based on NASA data of annual solar irradiation on the surface (edited from one from DLR):
Here is another map from the EU's ACP observatory (click to enlarge), where the scale is double, with solar panel yield also shown:
You can see that in the region where plants would be most likely to be built (Morocco, Tunisia, the north of Algeria), potential is about the same as in southern Spain, and most of Europe is no less than half of that.
If the resource is not limited by available surface, then, of course, the reason a site's yield counts is economics. (Desertec's original focus was on solar thermal power plants, which have yet to show that that can compete with photovoltaics in unit costs; but let's ignore this difference now.) Yield isn't the only site-related cost factor. First, local weather conditions (sandstorms, large diurnal temperature fluctuations) influence availability and maintenance costs. Second, transmission costs count, too. Grid losses and operating costs are smaller factors, but there is the need to construct new infrastructure, too (a key problem indicated in the Euractiv article, too). Building new grid connections across Europe for Desertec would not only bring high expenses, but based on how other grid connection projects fare, they would take a lot of time, too. In fact, real or imagined grid capacity problems are presently used to attack renewables (forgetting about other producers contributing to over-production, like new coal).
Delays in grid connection construction also constitute a risk premium. Further risk premiums come from security. On one hand, there is the natural risk stemming from the centralisation of supply: any disruption of the few grid connections taking electricity from Africa to Europe would have major consequences. On the other hand, there is the political risk: both construction and supply could be disrupted by sabotage or government action in a dispute.
This brings me to the issues of financing and power.
Risk premiums obviously impact financing, making banks ask for higher interests or not be willing to lend at all. But, even without the risk premium, thinking of the large profits and credit-worthiness of large companies is deceptive: small-scale renewables in Europe can mobilise investors Desertec can't, like the owners of all the homes and company and public buildings with suitable roofs resp. suitably windy farms, or local governments, or small utilities.
As for power, one part of this is the relationship with the host country. Will there be technology transfer? Even solar thermal involves high-tech components, thus IMHO significant parts of production would stay in Europe, not to mention Western companies giving away technology to local partners (something central to Algeria's scepticism). Once production for Europe is running, who owns the plants, who owns the grid, and how much of the profits go to the locals? A smaller benefit could be supplying local demand, which originally wasn't a goal, which is no wonder when considering that the business case was made with European electricity prices. But now, in view of local demand explosion and following Morocco's preferences, local supply seems to have turned into the only goal. Based on the past record of oil and mining companies in the developing world, there is also the issue of large companies with more economic power than an entire state corrupting the host state. In short, the risk of economic colonialism.
Power is also an issue on a market, where companies vie for market share. Onshore wind and photovoltaics, with their relatively small plants and moderate economies of scale, can be developed by investors ranging from home-owners through local utilities to energy giants – inevitably resulting in a market share decline for the energy giants who monopolised production with traditional power plants. Now, while solar thermal (like off-shore wind) is already something for larger companies, Dii is for the largest companies only. Paired with more or less successful attempts to choke on-shore wind and rooftop solar in Europe, I think Desertec if built as promised would have constituted an operation market share conservation, rather than a technocrat solution for a technical problem.
The above still assumes that Desertec achieving the goal of investing 550 billion and supplying 15-20% of the EU's electricity was ever a realistic goal for players like RWE or Siemens. Before the end of Desertec as an export project, I think predictable financing and grid connection difficulties and lack of strong enough commitment meant that there wasn't ever a prospect for much after a first few plants. With a few plants, Desertec wouldn't achieve much market share impact, but it would still be able to showcase a record-sized plant, which will have more media impact than hundreds of thousands of small installations with a higher combined capacity – in other words, there is a potential for greenwashing.