Desertec Update:  Coordinating 40 Countries, 200 Km of Undersea Cables, and €400B in Funding

While there are many areas where people may find fault with the Desertec Industrial Initiative (DII), you cannot fault them for a lack of ambition.

Back in July 2009, twelve leading European firms announced a grand vision to build massive solar plants in the deserts of the Middle East & North Africa (MENA), with undersea cables transmitting the electricity back to Europe using high voltage direct current (HVDC).

The plan calls for 100 GW (no, that is not a typo -- gigawatts) of concentrating solar power (CSP) plants.

Total cost estimate: €350 billion (which works out to €3.50/W), plus another €50 billion for the required power lines (20 transmission lines of 5 GW each).

Worldwide, there are currently 0.8 GW of CSP plants in operation.  This plan alone would represent a 100-fold increase in worldwide solar thermal power capacity. 

The stated goal of the Desertec Industrial Initiative is to meet about 15% of Europe's electricity demand (700 TWh) by 2050.  The timeline calls for a detailed plan to be drafted, and for contracts to be ready by 2012.  They plan to have some of the power flowing by 2015.  The project ran into some resistance last year when Algeria indicated that it will not participate unless the consortium agrees to engage in technology transfer to Algerian companies.  More recently, Desertec announced plans to build the first of its three reference projects in Morocco (likely to be in the range of 500 MW to 1000 MW).  Part of the goal with the reference plant is to ensure that laws are in place that allow for the import of renewable electricity at premium rates (i.e., that the projects are able to receive feed-in tariff rates).  While the announcement of a planned reference project looks promising, the enormous hurdles facing Desertec remain.

As shown in the map above, the initiative looks like the world-domination strategy of a James Bond villain.

Nevertheless, Desertec should not be underestimated. 

The members of the initiative are a veritable who's-who in the solar space: 

• Solar plant equipment manufacturer: ABENGOA Solar, First Solar
• EPC firms: MAN Solar Millennium,  M+W Zander
• Turbine manufacturer: Siemens
• Receiver manufacturer: SCHOTT Solar
• HVDC transmission: ABB
• Project finance providers: Deutsche Bank, HSH Nordbank, RWE
• Insurance company: Munich RE
• Utilities (electricity generation & distribution): E.ON, RWE
• Random Algerian foodstuff producer: Cevital
• Consulting firm: BearingPoint

The idea for the project was very much rooted in the 2020 target set by the European Union to use renewable source to generate 20% of its total energy (electricity, transport fuels, etc.).  As it will be difficult to move cars off gas & diesel, this goal entails moving electricity generation from 20% renewables in 2009 to 30% by 2020. 

There are two primary options for meeting this target.

When considering the technical challenges of option 2, one obvious question comes to mind: is option 2 even possible?  In a word, yes.

Transmission over long distances? Possible.

In China, Siemens has already built a 1,400 km power connection between a hydroelectric dam and a large power-consuming city - with only a few percent in power loss.  As it happens, 1,400 km is also the distance between Munich and Tunis.

Transmission Using Undersea Cables?

Currently, the longest undersea DC cable is the 290 km-long cable between Tasmania and the Australian continent.  The distance from Tunis to Marsala on the island of Sicily is 230 km.  The distance from Spain to Morocco is as little as 30 km (from Algeciras to Ceuta).

But technical challenges are not the real problem facing Desertec.  As the table below summarizes, Desertec faces a host of political and economic problems -- several of which may prove intractable.

It should be mentioned that DII is planning to focus its projects on the more stable countries in the region (e.g., Morocco, Tunisia), which should reduce (but not eliminate) some of the political risk.

A concern related to the first hurdle cited is that MENA countries may insist that a certain percentage of the components and labor be sourced locally -- which may have a significant effect on the cost and time required to complete projects.

So, how much more would it cost the European taxpayer if the plants were built in Europe instead?

The table below summarized the calculation.

[Note: this high-level calculation excludes the impact of land costs or challenges of building in Europe.  I plan to revisit this calculation including land costs in a later post.]

At the risk of stating the obvious, it is sunnier in the Middle East and North Africa -- but not that much sunnier than Spain & Southern Italy.  The DNI in Spain's deserts averages about 2,100 kWh/sq meter/year.  In the Sahara it is about 20% higher, at 2,500 kWh/sq meter/year.

So, whereas €350B in solar plants would be sufficient in the Middle East and North Africa, achieving the same results in terms of green kWh from plants in Spain and Italy would require 20% more plants, or an additional €70B.

But building the plants in Europe would result in ~€30B in savings from the power lines (and undersea cables) that wouldn't need to be built.  So the net difference is an extra €40B over 40 years.  That works out to an extra €1B per year.  Spread over a population 500M Europeans,  that works out to €2 per citizen per year to keep tens of thousands of jobs in Europe -- and to prevent Europe from becoming dependent on foreign countries for its electricity.

€2 per year for energy independence and massive job creation?

That sounds like a bargain.

The Desertec Vision: Looks nice, but couldn't this be built in southern Europe instead?