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Sat 19 Apr 2014 10:40 AM

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Desertec's woes could be the Gulf’s gain

The solar energy initiative has seen a number of partners walk out, but there is plenty of room for the GCC to take up the slack, says Ed Attwood

Desertec's woes could be the Gulf’s gain

Another month, another walk-out for Desertec. This time, the hugely ambitious scheme that aims to power Europe via the solar energy generated in the deserts of North Africa, has lost two of its main partners, E.ON and Bilfinger. So where does the project go from here?

The idea for Desertec was dreamt up by a German physicist, Gerhard Knies, who worked out that covering an area of the Sahara desert the size of Wales with solar panels could, in theory, provide all of Europe’s power needs. Such a plan would then obviate the need to rely on oil and gas imports from other parts of the world. As a result, the Desertec Industrial Initiative (Dii) was set up in 2009, with some big-name backers, including Siemens, Bosch, Deutsche Bank and Munich Re. The group worked in tandem with a non-profit organisation, the Desertec Foundation.

The plan? To provide 15 percent of Europe’s power needs by 2050 via a hugely complicated network of solar panels and wind farms that would stretch across most of North Africa and the Middle East. And what’s the cost? A cool $560bn.

As time has progressed, more big corporates have come on board, such as Saudi Arabia’s ACWA Power and State Grid Corporation, China’s third-biggest company. But in the five years since, the project has never really managed to get off the ground. Critics have derided it as ‘the work of a megalomaniac’ and portrayed the concept as a neo-colonialist form of natural resources exploitation.

In the couple of years or so, Desertec has also seen its high-level support shredded. Siemens and Bosch withdrew in 2012, ostensibly to focus on their own solar-powered projects in the wake of the Fukushima disaster, which resulted in Germany deciding to shut down its nuclear-power capability. Then the Desertec Foundation itself walked out on the project in July last year, citing rather mealy-mouthed concerns about “corporate governance and strategic consultation”.

So last week’s departure of E.ON and Bilfinger may well have put paid to the Desertec project in its current form. But that does mean that there is room for the Gulf countries to get more involved. Saudi Arabia, Qatar and the UAE are all facing a rapid demand for electricity. In Saudi Arabia and the UAE’s case, nuclear energy will certainly help, although this will also come at a huge cost. The fact that Dubai utility DEWA is even considering building a coal-fired power plant – with coal shipped in from abroad – is testament to the kind of bind the region finds itself in.

The Gulf is also, however, betting big on solar. Saudi Arabia is dropping $109bn in a bid to provide third of its power capacity by 2032. Abu Dhabi opened the world’s biggest concentrated solar power (CSP) last year. Qatar and Oman are getting their own solar projects into gear. So a stronger match-up between Desertec – or the Desertec partners – should not be ruled out. After all, the partners have the expertise, and the Gulf has the funds, the space and the desire. Companies like E.ON are already working closely with Abu Dhabi’s Masdar, for example. And if the Gulf can extract enough energy from its deserts to not only power itself, but also export electricity to Europe as well, then several policy headaches could be removed in one fell swoop. It’s a distant dream, but then the GCC countries do like to think long term.

After all, despite the pull-outs and the lack of progress, it’s tough to disagree with the notion that the Desertec concept itself is a sound one. As Knies himself once put it, are “we…really, as a species, so stupid” not to make better use of this resource?

Ed Attwood is Group Editor of Arabian Business.

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