Sahara Solar Energy Could Power Europe Inc.
A consortium wants to invest $560 billion in Sahara solar panels
By Carol Matlack
BW Magazine
September 13, 2010
The Sahara gets twice as much sunshine annually as most of Europe. The
European Union wants to get 20 percent of its electricity from
renewable sources within a decade. So why not build solar power plants
across North Africa and ship the electricity north via power lines
under the Mediterranean?
Over the past year, more than 30 European blue chips have joined the
Desertec Industrial Initiative (DII), a consortium that seeks a $560
billion investment in North African solar and wind installations over
the next 40 years. The DII is completing a feasibility study and hopes
to be building its first power plant by 2013. A separate group of
companies called Transgreen, formed in July, is working on plans for
the thousands of miles of high-voltage lines needed. The challenge is
immense: Winning agreement from very different countries on two
continents to carry out one of the biggest infrastructure projects in
history.
Many backers are eager for a share of rich construction contracts.
They include engineering outfits such as Germany's Siemens (SI) and
Swiss-Swedish group ABB (ABB) and solar companies Abengoa Solar of
Spain and First Solar (FSLR) of Arizona. Giant Italian utility Enel
wants to rely less on Russian gas, and German insurer Munich Re sees
the project as a hedge against damage from global warming. "We are
creating a large network of allies with complementary interests," says
the DII's boss, a former Dutch utility executive named Paul van Son.
There's little doubt that Sahara sun can power Europe. Cables already
carry electricity under the Mediterranean�though the power flows from
Spain to Morocco. And after years of false starts, scores of large-
scale solar power plants are being built or in advanced planning
stages, from the American Southwest to the Mideast. "There is now a
good track record," says Bernd Utz, head of Siemens' renewable energy
division.
With the technology the consortium plans to use, solar-powered
electricity costs at least four times as much per kilowatt-hour as
power from coal- and gas-fired plants, according to Bloomberg New
Energy Finance, an analysis group. Governments have used subsidies to
support alternate energy companies until their costs are more in line
with oil and gas. The U.S. in July awarded a $1.45 billion loan
guarantee to lower financing costs for the planned Solana power plant
in Arizona, at 280 megawatts one of the world's largest.
The Sahara project envisions generating capacity equal to almost 400
Solanas. Where would the financing come from? The DII and Transgreen
member companies so far have put up less than $10 million for
feasibility studies. They want Europe's governments to require
utilities to pay more for Sahara-generated energy, a preferential
arrangement that European countries use to spur solar and wind energy
development at home.
Trouble is, Germany and Spain are reducing these rates, which the
utilities often pass on to customers. The depth of political support
in North Africa is another issue. Morocco, Tunisia, and Egypt back the
project. Algeria wants to develop solar plants on its own. Some
European critics, meanwhile, see a case of overreach. "European
countries can develop faster and cheaper than Desertec a renewable
energy supply from indigenous sources," says Hermann Scheer, a member
of the German Bundestag who heads Eurosolar, a Bonn-based solar
research and advocacy group.
Even Europe's sunniest regions, though, don't get enough sun to
generate power as efficiently as in North Africa, says Abengoa Solar
Chief Executive Officer Santiago Seage. The Sahara's ample space is
crucial since plans call for fields of mirrors, totaling hundreds of
square miles, at more than 20 locations. The mirrors would concentrate
the sun's rays to create heat and drive turbines� a technology known
as concentrating solar power (CSP) that allows heat to be extracted
and stored gradually so electricity is generated continuously. Plans
also call for solar photovoltaic and wind turbine generators, whose
energy costs less to produce than CSP yet don't offer storage
capacity. "For utilities, CSP is a much more robust product," Seage
says.
As the consortium feels its way forward, some European countries could
strike bilateral deals with North African suppliers. Morocco, for
example, has announced plans to build solar plants for its own use.
Since Morocco's government can't afford the subsidies that would make
solar power feasible inside its own borders, it might team up with
Spain or France to help with financing in exchange for a share of
output, suggests Logan Goldie-Scot, a London-based analyst with
Bloomberg New Energy Finance. "The [Desertec] project will happen," he
says, yet "it's likely to be a series of small projects."
The bottom line: Europe is pursuing a plan to tap the solar energy of
the Sahara. Financing is a hurdle, as is securing cooperation from
many players.
Matlack is a Paris correspondent for Bloomberg Businessweek.
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