Alternative energy becomes priority

14 November 2012

Renewable energy initiatives such as the Desertec project have the potential to transform the economies of North Africa, and experts are urging governments to fast-track green energy schemes

The Desertec project, a bold initiative to transform the deserts of North Africa into a powerhouse supplying clean energy to southern Europe, was scheduled to take a monumental step towards fruition this month.

The planned signing of a Memorandum of Understanding (MoU) on 7 November between the Moroccan government and chief architect Germany, as well as partners France, Spain and Italy, would have paved the way for a 150MW power plant to be built in southern Morocco by Desertec Industrial Initiative (DII) and the government. However, last minute haggling by Spain saw the MoU delayed, much to the chagrin of the other partners.

Cross-border power supply

But DII’s chief executive officer, Paul van Son, remains hopeful of a positive outcome. “I am confident that the governments will sort out the negotiations,” he told the US’ Bloomberg. “The MoU will be a big step forward as it will bring renewable energy across borders from Morocco to Europe.”

The geography of North Africa, in reality more varied than the usual cliches of the sand sea of the Saharan desert, is highly conducive to two of the most economically productive forms of alternative energy: solar and wind power. By the same token, it is not suitable for two other forms of renewable power: biomass and hydro. All-round sunshine and good wind availability coupled with large swathes of land unencumbered by population or agriculture make it textbook wind-and-solar territory.

From this emerged the Desertec project. The scheme plans to produce large amounts of primarily solar but also wind electricity across North Africa from Morocco through Algeria, Tunisia and Libya to Egypt, for local use and export to southern Europe via high-voltage direct current (HVDC) cables. Concerted steps are needed to overcome issues of technical feasibility, securing capital, establishing political and regulatory frameworks, and overcoming environmental and social issues.

The most recent collaborative meeting to take Desertec and allied projects forward was convened by the German Marshall Fund (GMF) of the US at the headquarters of the EU in Brussels in July. At the meeting, Van Son presented the 2050 Desertec Power Report, which he described as the blueprint for not a singular project but rather an opportunity to create renewable energy markets in the broader Middle East and North Africa (Mena) region.

Van Son argued that the early importance of wind energy could ensure the technology accounted for half the energy produced for export to Europe. The role of solar photovoltaic (PV) in the Desertec mix could be reduced due to various economic and environmental issues.

At the same meeting, Michael Kohler, head of EU European Energy Commissioner Gunther Oettinger’s cabinet, noted that while solar energy projects in North African countries were up to 35 per cent more efficient than equivalent projects in Europe, they faced higher costs due to the risk premium imposed by political and structural challenges. Establishing better EU-Mena frameworks for energy policy and regulation would be helpful, he added.

He also outlined certain elements required for inclusion in any proposed EU-Mena energy agreement, including vocational training, employment opportunities, support in the regulatory process and infrastructure development. The latter could be key in ensuring operational access to remote wind and solar sites.

Two other issues need to be addressed to make the Desertec concept work. One is connectivity. North Africa has the potential to produce substantial amounts of wind and solar power, and delivering it to domestic markets is relatively simple. However, the infrastructure challenges in guaranteeing energy exports, which will ensure the long-term economic viability of the scheme, are considerable.

Subsea grids to link renewable – mostly offshore wind – projects in northern Europe, the North Sea and the Baltic are also planned to make those schemes viable. 

Power transmission losses

Ultimately, the scale of what is required could exceed that of North Sea operations. Although North African renewables could supply 20 per cent of Europe’s electricity by 2050, equal to $79bn in export revenue, transmission losses across such long distances could prove significant. Building HVDC lines could reduce transmission losses dramatically, but these would come at a cost.

A recent report by think tank Energy Policy estimated that hooking North Africa up to the European grid would require $135bn, to deliver just over 700 terawatt hours of power a year by 2050. That might add $0.10 a kilowatt hour to European energy costs.

The second issue relates to energy storage. Comprehensive grid connections enabling electricity to be balanced within a system and sent to where it is needed can help, but the intermittence of alternative energy – solar only generated by day, wind only generated when the wind blows, and even then only when it does not blow too hard – makes even an interconnected regional electricity network difficult to balance.

This means that some form of energy storage will be required if Desertec is to reach its full potential. Several options exist, such as concentrated solar power (CSP), pumped storage hydropower stations and synthesised gas.

At present, small-to-medium-sized solar PV projects located near urban centres aside, wind power is the predominant form of renewable energy in North Africa.

While Egypt has outlined ambitious plans to establish 7,200MW of installed capacity – 12 per cent of its electricity – for wind power by 2020, the country really setting the pace is Morocco. The country’s Tarfaya wind farm project reached financial close in September and, with a capacity of 300MW, is set to be the largest wind farm in Africa, overtaking the Zaafarana wind farm in Egypt.

Overseen by the Office National de l’Electricite (ONE), players in the Moroccan wind market include Italy’s UPC Renewables and Italgen, Sahara Wind, and France’s Cegelec. French firm Medgrid is exploring connectivity issues for North African renewables, specifically connecting Moroccan wind output to the southern European grid. 

Potential investors in North African wind power will meet in Morocco later this month. These include commercial and development banks, equity funds, governments and regional sovereign funds, along with potential European businesses including the wind technology and infrastructure supply chain and utilities.

Political support for alternative energy

Unsurprisingly, the fallout from the Arab Uprisings has delayed the progress of key projects. In Tunisia, regulatory bottlenecks within the new government may have delayed the 2,000MW Tun Nor CSP project supplying southern Italy via a 600km HVDC line until 2016 or 2017.

Despite these glitches, harnessing the renewable potential of North Africa has had high profile political support. In endorsing the Desertec initiative, Jordan’s Prince Hassan Bin Talal has promoted the importance of CSP technology for the country’s long-term economic potential. “I hope that before they jump on the nuclear bandwagon, people will look at this source of energy, which is freely available in endless supplies,” he told Radio Netherlands in 2007.

The potential to link North Africa with Europe’s electricity grid has also been emphasised by King Mohammed VI of Morocco. The expected agreement between the country and its four European partners represents the next phase of North Africa’s green energy development. In the short term, Germany’s RWE plans to build a 50MW solar and wind farm in Morocco in 2014, with the potential to add a further 500MW of generation capacity. Despite the withdrawal of Germany’s Siemens from the Desertec group in October, and Bosch a month later, there are still plans to invest E500m ($635.6m) to generate solar power in North Africa and export it to Europe in the next few years.

Prioritising renewables

The political will to drive forward renewable energy in North Africa remains strong. The technology certainly exists, with the caveat of adapting current wind turbines and solar panels for the uniquely rugged and corrosive conditions of the desert. Service infrastructure and grid connections, along with the need for energy storage, remain a challenge.

Funds from Saudi Arabia and Qatar are still expressing interest. If investors can be persuaded the regulatory regimes and financial returns are sufficiently robust, the renewable energy resources of North Africa and the electricity markets of southern Europe could be a good fit.

This energy vision was summarised by Stephen Tindale from the Centre of European Reform. Speaking before the House of Lords’ EU Energy sub-committee in London, Tindale urged Europe, through the European Regulators’ Association, to invest in grid connectivity to better deploy renewable energy.

“Europe could be powered by wind and wave electricity from the north at night and solar electricity from the south by day,” he told the committee. “The energy infrastructure to make this possible should be a major priority.”

With the wires in place, North Africa’s European energy market beckons.

Key fact

North African renewables could supply 20 per cent of Europe’s power by 2050

Source: MEED

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