Taking the initiative on regional solar power

17 November 2009

An ambitious project in the Sahara desert is at the forefront of a series of regional renewable energy schemes

Hopes for a legally binding treaty at the upcoming UN Climate Change Conference in Copenhagen have been all but dismissed by the US and others, but the December summit could still set some useful new targets to reduce carbon emissions.

Environmentalists may be disappointed by such scaled-back ambitions, but any progress at all will provide a welcome boost to renewable energy initiatives in the Middle East and North Africa, where hydrocarbons are currently used for almost all power generation.

With few renewable energy schemes planned in the Gulf, the focus of activity is in North Africa, and in particular, an ambitious plan to use the Sahara desert as a source of solar power for Europe.

The Desertec initiative is the idea of the Berlin-based Desertec Foundation, which was set up by the Trans-Mediterranean Renewable Energy Co-operation (Trec) network, a group of scientists, politicians and other experts in renewable energy from Europe, the Middle East and North Africa. It is also supported by Jordan’s Prince Hassan bin Talal and the German Association for the Club of Rome, the Hamburg-based arm of the international think tank.

Pilot projects

Trec has been pursuing the idea of using the desert sun to power Europe’s homes and factories since 2003, but the size of the enterprise means it has often met with scepticism.

But the plan does now seem to be moving closer to reality. In late October 2009, the Desertec Foundation met with 12 private companies in Munich to establish the Desertec Industrial Initiative. With private companies backing the scheme, the emphasis has turned to ensuring that the technical, financial and political support is also forthcoming.

The new Desertec Industrial Initiative consortium is led by German reinsurance firm Munich Re and includes several German energy firms, consultants and banks, including Siemens, Deutsche Bank, HSH Nordbank, Schott Solar, M&W Zander, Eon, RWE and Man Solar Millennium – the latter a consortium of Man Ferrostaal and Solar Millennium. Switzerland-based ABB, Algeria’s Cevital and Spain’s Abengoa Solar complete the line-up.

Over the next four years, these companies plan to create a political and regulatory framework in conjunction with the relevant governments, and set up pilot projects.

If it does go ahead, the Desertec concept is likely to be rolled out as a series of new solar and wind power projects, with solar predominating. While electricity generation is the main aim, any waste heat from the power generation could also be used to desalinate water.

“The world’s deserts receive 700 times more energy from the sun than humankind needs,” says Peter Terwiesch, chief technology officer at ABB. “Some 90 per cent of the world’s people live within 3,000 kilometres of a desert and could be supplied with solar power from it.”

The companies involved say the technology needed to harness solar power effectively is already well developed. The solar plants they plan to build will use concentrating solar power technology. This uses lenses or mirrors to focus sunlight into a concentrated beam. The heat from the beam is used to heat oil, which boils water. The resulting steam is used to drive turbines and electricity generators.

The technology is already so well developed that some observers argue pilot schemes are unnecessary. “There is no need for pilot projects, the fully fledged plants are already there,” says one solar industry source.

Among the schemes already in operation are the Andasol 1 and 2 plants in southern Spain, which produce 50MW each. These two plants were built by a team of Solar Millennium and Spain’s Cobra. The first connected to the grid in December 2008 and the second is in the commissioning phase. A third plant will connect to the grid in 2011.

In Morocco, Spain’s Abengoa and France’s Alstom are working on the Ain Beni Mathar solar combined-cycle hybrid plant, which will include a 20MW solar field.

“The countries that could contribute in the first wave are those with access to the European grid, so North Africa is a natural choice”

Bernd Utz, chief technical officer, Siemens

Cobra is also working with Abengoa subsidiary Abener on a 150MW solar thermal plant at Hassi R’Mel in Algeria, and in Egypt, the local Orascom Construction Industries and Spain’s Iberdrola are building a 150MW hybrid plant with a 30MW solar island at Kureimat.

Abu Dhabiand Jordan are also each planning to build a 100MW concentrating solar power plant. “The bigger you build it, the greater the scale of the effects,” says Matthias Reining, public relations manager at Schott Solar. “Over 100MW is definitely the better option.”

There is a greater technical challenge in minimising energy losses during the transfer of power to Europe. An interconnection between Morocco and Spain is already in place, but electricity currently only flows from north to south. If it is to be successful, the Desertec scheme will need to build new high-voltage, direct-current transmission networks.

This type of network can keep energy losses to as low as 3 per cent for every 1,000 kilometres. But even so, it could mean transmission losses of up to 15 per cent between some solar plants and customers in Europe.

“The grid component is a complex one,” says Thomas Rueschen, global head of Deutsche Bank’s asset finance and leasing division. “It is probably more difficult than building the individual plants.”

Notwithstanding such issues, for now the biggest challenge to the Desertec initiative appears to be not technical but political.

“Technology is not the key hurdle; politics is,” says Bernd Utz, chief technical officer at the renewable energy division of Siemens.

Europe is already wary of relying too heavily on a single region for its energy needs, having suffered when Russia restricted its gas supplies to Europe in a dispute with the Ukraine in early 2009. As a result, it will not wish to commit to buying too much of its energy from Algeria or other North African states.

Not all the power generated is destined for Europe; some will be used locally. But questions about the price at which the power will be sold need to be addressed. Given that energy subsidies in North Africa are extremely high, the answer will not be straightforward. Consumers in Egypt, for example, pay just $0.02 a kilowatt hour (kWh) for electricity, while German customers pay $0.22 a kWh.

It is also not yet clear how the projects will be financed. As part of its remit, the Desertec Industrial Initiative will develop a financing framework. This is likely to involve bank debt, bonds, equity from sponsors and public funding. “For a project of this magnitude, we have to look at all financial solutions,” says Rueschen. “Individual projects will have different risk profiles, so may require different financing structures.”

Financing framework

While such issues are being resolved, some countries in the region could go ahead with separate renewable energy projects, which will be able to connect to the Desertec grid at a later stage. Morocco in particular appears eager to push ahead with its own schemes. In early November, King Mohammed VI announced a $9bn solar power project with a total capacity of 2,000MW, spread across five sites.

In time, Desertec could also be expanded beyond the North African states to the Levant and Gulf, although countries bordering the Sahara are the main focus of the concept for now. “It is clear that the countries that could contribute in the first wave are those with access to the European grid, so North Africa is a natural choice,” says Utz. “The concept is also open to the Middle East. Power transmission will be a little more difficult there, but the resources are excellent.”

Existing plans to connect the Egyptian and Saudi grids would make it far easier to link the GCC grid and the European market in the future. In June, Canada’s SNC Lavalin won the consultancy contract for that project.

But ultimately, for the Desertec initiative to make sense, it needs governments in Europe and the region to provide greater backing for renewable energy, and someone to finance it.

The next test of governments’ attitude to climate change will come when they meet to discuss the issue in Copenhagen from 7-18 Dec-ember. Even if no binding treaty is forthcoming, the companies behind Desertec will be looking for signs of a renewed commitment to deal with the challenge. “It is not that Copenhagen is a one-time opportunity or the only thing this project depends on, but a call for action would further increase the tailwind for the project,” says Terwiesch.

CAPTION - Underused resource: Desert areas are estimated to receive 700 times more energy from the sun than would be needed to meet global demand

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