Desertec and Mediterranean renewable plans

July 13 marked the anniversary of two events that could prove extremely important for future energy supplies in Europe and the Middle East and North Africa region (MENA): the establishment of the Union for the Mediterranean (UFM) and its Mediterranean Solar Plan in 2008, and the founding of the commercial Desertec Industry Initiative last year. Most people will have heard of Desertec, the initiative to construct large-scale solar and wind power plants in the north African desert. Not so the Mediterranean Solar Plan, which at the moment is familiar only to industry insiders. Yet both initiatives are ambitiously pursuing similar goals. The Mediterranean Solar Plan aims to create 20 gigawatts' worth of new renewable energy sources by 2020 – the equivalent of around 15 coal-fired power plants – whereas Desertec has set itself the long-term goal of supplying 15 per cent of Europe's electricity by 2050 from its solar and wind power plants.

Mediterranean management stalled early on but Desertec making progress

In December 2008 efforts to set up the UFM stalled due to the outbreak of the Gaza War. High-level ministerial meetings of member states being postponed and important decisions on the UFM's structure being put on hold. Only now is the Union taking the first steps to set up a secretariat in Barcelona: a group of staff and experts from member states who will, among other things, help shape and implement the Mediterranean Solar Plan.

The Desertec Industry Initiative (DI) is developing at a much greater pace. Founded by 13 partners, most of them German, the consortium now has 17 partners from seven countries. Negotiations for Tunisian and Italian companies to join the consortium are advanced, and up to six further additions to the consortium are expected. Another 22 firms support DII as associated partners. By expanding to include companies from the MENA region, DII is also fulfilling demands that those countries in which power plants are to be built be involved from the outset.

Two energy projects, one priority region

Given that access to energy is a cornerstone of the United Nations' Millennium Development Goals, development of the MENA region must take priority in both projects. Enormous population growth and increasing industrialization have left African countries with a great deal of catching up to do when it comes to energy projects. Industrialized nations are facing the challenges posed by climate change, which means prioritizing investment in renewable and efficient energy technologies – and the same must go for developing countries and emerging economies.

Against this backdrop, the question arises of why fossil power plants are still being built in both industrialized and developing countries. There are technical reasons for this: renewable energy sources like wind power and photovoltaics will not be able to serve as base-load energies until ‘intelligent' electricity grids and storage capacities become available. What's more, the cost of investing in renewables is still higher than that of investing in fossil fuel-fired power plants – although costs for fuels in these plants, like coal or natural gas, recur throughout the plants' operation.

What renewables and large-scale projects like the DII need are a clear legal, administrative and above all economic frameworks. Only then will the high investment costs pay off later. The conditions must apply in those countries in which the power plants are to be constructed as well as to legislation in the European Union and in EU member states that plan to import electricity from Africa.

Encouraging use of renewables in EU, Germany and beyond

The 2009 “EU Directive on the promotion of the use of energy from renewable sources” already set the framework for energy projects with non-EU countries as well as for importing electricity generated. In Germany's case, this means that the question of whether the Renewable Energy Sources Act will be extended to include a feed-in tariff for ‘desert electricity' is a critical one. Of all the countries in the MENA region, Morocco appears to be making the most progress when it comes to creating conditions conducive to using renewables. The country currently imports 95 per cent of its energy requirements, but wants to increase its reliance on renewables to 40 per cent of total energy use by 2020. This is another reason that the DII consortium regards Morocco as an ideal partner country and is planning to begin work on installing a first power plant park there – one it hopes will prove that the vision of generating electricity in the desert can be realized.

Clear regulatory frameworks needed, not intergovernmental entrepreneurialism

So, where do the two initiatives – the Mediterranean Solar Plan and DII – now stand, one and two years respectively after they were founded and what priorities should they set for the future? The Mediterranean Solar Plan is a political process and should be regarded as such. It is not the task of an intergovernmental process to take on entrepreneurial initiatives and install power plants – especially when it takes two years to set up a secretariat. The Plan's focus should, therefore, be on speeding up the process of creating the regulatory framework that will enable private-sector initiatives and investments in the UFM's member countries.

The countries in the MENA region still do not have enough financial clout to independently shoulder such cost-intensive cross-border infrastructure projects. But the launch of the DII has already led some MENA countries to re-shape their regulatory frameworks and set new goals in regard to expanding their renewables capacities. This will not only make them more attractive to investors from industrialized countries but also for financial institutions such as, for example, the African Development Bank, the World Bank and the European Investment Bank. In that respect Desertec and the Mediterranean Solar Plan are parallel processes that should complement and cross-fertilize each other.

The Guest Column represents the author's personal opinion.

Matthias Ruchser works with the German Development Institute / Deutsches Institut fuer Entwicklungspolitik (DIE).

The German Development Institute / Deutsches Institut fuer Entwicklungspolitik (DIE) is one of the leading think tanks for development policy world-wide. DIE draws together the knowledge of development research available worldwide, dedicating its work to key issues facing the future of development policy.

Author: Matthias Ruchser
Editor: Sophie Tarr