Desertec: A Fata Morgana?

In 2009, a group of academics, policy makers, and industry professionals came together and created the Desertec Industrial Initiative (DII) and the DESERTEC Foundation with the goal of meeting 15% of Europe’s electricity needs and two thirds of the Middle East and North Africa’s electricity needs with renewable power generated in the deserts of northern Africa by 2050. Needless to say, many, including some very prominent players in the renewable energy industry, believe that the Desertec vision is more of a pipe dream than a viable electrification solution for the region. Indeed, Dr. Hermann Scheer, member of the German parliament, EUROSOLAR president, and general chairman of the World Council for Renewable Energy, claimed that even the initiators of the Desertec vision know “there is no prospect of success.” While the Desertec vision has merits and dreamers are needed in every industry, Desertec is currently more focused on the needs of its partner European technology providers than the needs of its partner developing nations.

The Desertecconcept is relatively simple;generate renewable energy in sparsely populated deserts and export that energy to population centers.  Within six hours deserts around the world receive more energy from sunlight than the human’s consume in a year, and 90% of the world’s population lives within roughly 1,850 miles of a desert. The Maghreb[1]contains some of the best solar and wind resources in the world. Therefore, clean, renewable electricity can be generated by large scale wind and solar[2] plants in EUMENA[3] and either consumed locally or exported to neighboring countries (primarily from North Africa to Europe). The proponents of the Desertec vision even go on to say that meeting 90% or EUMENA’s electricity needs with renewables by 2050 is both economically and technically viablewith an interconnected EUMENA grid.

Desertec is broken down into two main components: the DESERTEC Foundation and the DII. DESERTEC Foundation is a non-profit focused on developing the Desertec concept and vision. DII is a group of over 50 companies, nearly entirely European, working to make the Desertec vision a reality in EUMENA. DII is currently working with the governments of Tunisia, Algeria and Morocco, among others. For the purpose of this article, we will focus on the three aforementioned countries’ solar power development initiatives. It is important to understand the various national solar programs and the state of the global solar industry in order to understand how the Deserteccould better serve its partner nations.

Morocco is thus far the only Desertec nation that has begun to develop a significant amount of large scale renewable energy projects. Although no projects are officially recognized as Desertec projects, the DII has helped the Moroccan government develop the Moroccan Solar Plan. Morocco’s goals are enviable; the government plans to install 2,000 MW of solar capacity and 4,000 MW of wind capacity by 2020. The Moroccan Agency for Solar Energy (MASEN) has been charged with the development of the nation’s solar resources. MASEN is led by officials from variety of different government agencies including the deputy managing director of the Office National de l’Electricité (ONE), the state-owned utility in Morocco, and the Vice Chairman of the board of the Ministry of Energy and Mines (MEM). This type of broad government support is crucial for the success of a solar program. The nation’s program is heavily dependent on STEG technologies. Morocco is currently developing a 160 MW STEG plant with thermal energy storage and has requested qualifications for two more large STEG plants. One of the main stated goals of the DII is to foster a knowledge industry and aid in the development of its partner nations. However, the qualifications in the two rounds of tenders thus far have practically designed Moroccan companies out of participation. Limited Moroccan capital will be deployed for the first plant, with the majority of funding coming from development banks like the AfDB, KfW, and the World Bank. In addition, it is unclear at this stage how or whether any project proceeds will go towards training Moroccan workers, etc. It should come as no surprise that a DII shareholder was the winner of the first MASEN project.

The Algerian and Tunisian solar plans are significantly less developed than Morocco’s. Algeria has made very bold and ambitious statements under the guidance of Desertec. Algeria’s stated goal is to develop 22 GW of renewable energy by 2030 with 10 GW earmarked for export to Europe. Thus far, no major projects have been developed and no major tenders have been issued for projects in Algeria. In addition, the Algerian state-owned holding company Sonelgaz Holdings has announced plans to develop a PV panel manufacturing facility, although little progress has been made on this project. This manufacturing project was, unsurprisingly, being supported by European manufacturing equipment providers. Tunisia’s plan outlines 4.7 gigawatts of renewable energy by 2030. Currently, only very small scale distributed solar energy and some larger scale wind projects exist in Tunisia. The main solar project being developed in Tunisia presently is the TuNur STEG project, led by British NurEnergie.

These nation’s solar plans exhibit a distinct trend; every nation’s plan is designed heavily around utilizing European technologies or exporting power to Europe. Morocco’s prevented the participation of Moroccan companies for all but labor jobs, and Algeria and Tunisia’s plans are on track to do the same. Rather than focusing on rural electrification or developing local knowledge industries through public-private partnerships, the focus seems to be on creating captive sales channels for European technology providers. The plans present a framework for European companies to sell into a new market using funding from International Finance Institutions. While there are certainly arguments to be made for the use of STEG technologies over PV (energy storage, cost curve location), the market reality is that PV technologies are roughly 50% cheaper than STEG technologies at the moment. Nonetheless, the DII has continued to favor STEG technologies and has helped to structure its partner nation’s solar plans around STEG. However, these developing nations will be the ones required to support the higher purchase price of STEG-generated electricity over PV-generated electricity.

Ultimately, the Desertec vision is undeniably merit-worthy. The world needs its developed and wealthy nations to aid in the sustainable development of emerging nations such as those in the Maghreb. Solar PV is cost competitive with diesel fuels and biomass currently used for rural electrification and energy generation and with the right business model, PV could bring electricity and all of its associated benefits to millions of people. However, the DII takes a heavily European-centric view of developing these nation’s power systems. Surely, these nations can and would benefit from large scale deployment of renewable energy. In Algeria, renewable energy deployment would free up gas for exports. In Tunisia and Morocco, renewable energy deployment would alleviate trade deficits from importing fossil fuels. The Maghreb nations could all benefit from increased electrification and increased trade with Europe. However, in order for the Desertec dream to become a reality, Desertec will need to start by reorganizing and taking a developing nation-centric view.