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Desertec: An aborted project or just a change of direction?

Published online 5 January 2015

Desertec's ambitions of meeting regional demand and providing 15% of Europe's electricity needs by 2050 through a super grid were dashed only five years into the project. Here's why. 

Louise Sarant

© Macmillan New Zealand 
A meeting in Rome last October marked the end of Desertec's vision of harnessing the vast solar energy in the deserts of North Africa and the Middle East. With only three of the original 19 shareholders, ACWA Power from Saudi Arabia, SGCC from China and RWE from Germany, on board, the “adapted format” of Desertec Industrial Initiative (Dii) will now function as a service provider and a consulting firm for these companies’ projects in the region. 

The founders of Desertec are calling the scope reduction, “a change in direction,” but it seems that Desertec, until recently among the most aspiring inter-regional solar project ever conceived with a budget of €400 billion, has simply crumbled.  Desertec has rapidly been losing momentum since 2012, a slowdown which culminated a month ago when all but three of its stakeholders pulled out. 

At the meeting in Rome, Paul Von Son, Dii former CEO, attempted to explain why the project has faltered; “costs were very high,” he says, “and some companies said they were not that interested in the Middle East and North Africa.” 

2012: A turning point

The developments beg the question of whether the idea of an electrically interconnected EU-MENA was idealistic, given the general distrust among neighbors in the region and ongoing political instability. What caused the stakeholders' gradual loss of confidence?

In 2012, when Desertec’s downfall began, Spain was supposed to sign a declaration of intent to connect high-voltage power lines between Morocco and the rest of Europe. Instead, it failed to attend the ceremony, and consequently a deal on three Moroccan solar power plants was compromised. 

Spain's absence was perhaps due to its considerable over-capacity and the fact that its electricity prices are the cheapest in all of Europe. “Spain receives a huge demand for export from North African countries which have rather limited production capacities,” explains Dominik Ruderer from Dii, whose role at Dii is to advocate renewable energy, regional infrastructure development and market integration in Europe, the Middle East and North Africa. 

“Most of these countries have trouble attracting sufficient investments into power generation, which is why importing from Spain [still] remains the cheapest option,” he adds. 

But perhaps the biggest blow to Desertec was when Bosch and Siemens, two major industrial shareholders and backers of Dii, withdrew from the initiative in 2012. Siemens blamed cost-cutting measures, and has subsequently pulled out of all solar-related projects and cancelled all its solar divisions, to focus solely on investing in wind energy whose price has been going down for years.

A Siemens spokesman, Alfons Benzinger, told Nature Middle East the falling price of photovoltaic (PV) power generation was a primary reason it had pulled out of the solar industry. The market changes were “dramatic” and unforeseeable, added Benzinger. “Our decision to quit solar projects was combined with our decision to pull out of Desertec,” he explained. By joining Dii, Siemens was not committing to a project, he said, but to an initiative that was supposed to prepare the ground – technically, financially and politically—to realize a vision. “In the first phase (three years), we supported Dii with technical expertise, and that’s all what we could bring. We thought at the time that Dii could make the Desertec vision a reality.”  

Siemens decided at that point that they couldn’t do more, especially as it became clear that “no one was willing to invest” in a pricey technology such as Concentrated Solar Power, which Siemens was backing, when PV prices were at their lowest. The dwindling support of the German government, enduring the brunt of a global financial meltdown, compounded the lack of viability. 

Desertec: The present 

Most of these countries have trouble attracting sufficient investments into power generation, which is why importing from Spain remains the cheapest option.

In its new shape, Dii is focusing on Morocco, Turkey, KSA and Egypt for its services. These countries have adopted renewables in their national energy development strategies, and a month ago, Egypt's Minister of Electricity announced the long-awaited adoption of a feed-in tariff for the purchase of solar and wind energy produced by private companies.  

Dii's communication officer, Klaus Schmidtke, explains that “the volume of energy created through solar power grew from 70MW in 2000 to 3GW in 2014. In the past years, the MENA countries have recognized the huge socio-economic potential of renewable energy development and have launched projects, and most have agreed on solid expansion targets of 35GW by 2020.”

While Dii has not been involved in all these projects, Schmidtke believes they show their feasibility, and that the policy and research work Dii has done for the past years is valuable. While he believes that Dii's work has improved acceptance of renewable energies in the MENA region over the past five years, he also admits that many countries are still not ready to embrace the project.

While Desertec's vision for the future has been compromised, Schmidtke insists that the amount of energy Germany will need by 2050 – a recent study by the German Federal Environment Agency predicts a five-fold increase in consumption – could not be generated solely by locally produced wind and solar energy. 

“The growing power demand could be satisfied only in conjunction with other countries and regions,” he says. 

In a previous study, Dii had estimated that the desert sun could provide more power in six hours than could be used in a year.

Europe currently imports about 40% of its coal, 67% of its natural gas, 85% of its oil and about 96% of its uranium. While most countries in Europe, the Middle East and North Africa are dependent on fossil fuel imports to generate electricity, harnessing the power from deserts could help overcome the dependency on fossil fuels and their volatile prices.

Another benefit of a future energy system that includes power from deserts, explains Schmidtke, “would be the creation of a holistic system where all countries could meet their power supply from a variety of energy sources.” Contrary to the current situation, not a single exporter would provide more than 10% to the European energy supply, which he considers reason enough for strengthening cooperation between EU and MENA.

Ruderer summarizes the new direction taken by Dii as a move from pure research to concrete action on the ground. “We are now able to tell policy-makers that it's not just up to the industry to take action, but that it's also up to them to change regulations and to put up a fight for this energy interconnection.”