Desertec Dies

Desert Energy Project Turns into a Mirage

Solar dreams will have to wait. Source: DPA
Solar dreams will have to wait.
  • Why it matters

    Why it matters

    With only three of its 50 initial partners remaining, Desertec has shrivelled into a small consultancy project led by German energy firm RWE.

  • Facts

    Facts

    • Corporate infighting plagued Desertec from the beginning.
    • The turmoil of the Arab Spring deterred investors from the Middle East and North Africa.
    • Germans are now finding renewable sources of energy at home.
  • Audio

    Audio

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It was supposed to be an undertaking akin to landing on the moon.

“Desert energy is the Apollo project of the 21st century,” announced Peter Löscher in 2009, when he was still head of German industrial giant Siemens. He was not the only boss seeing himself as the savior of humankind. “We cannot afford to fail,” warned Torsten Jeworrek of the reinsurer Munich Re, hinting at the threat of climate change.

It was the venerable think tank, the Club of Rome, that gave birth to the idea of building solar power plants in North African deserts to feed green energy into the global power grid. About 50 businesses in the energy, financial and technology sectors followed down the path to this utopia.

They came together in the Desertec Industrial Initiative and announced grandly at its start five years ago that they would invest some €400 billion ($507 billion) by 2050 in the desert project. Back in 2009, they predicted 15 percent of Europe’s electricity needs would eventually be covered by the solar energy from North Africa.

Five years later, only three of the 50 initial partners remain. Following the departure of Siemens, Bosch, Bilfinger, E.on and Deutsche Bank, the reinsurer Munich Re withdrew this week from Desertec. Only the energy concern RWE, the Saudi energy firm Acwa Power and the Chinese state electric company, State Grid, remain on board. The dream of clean desert energy has turned into a mirage.

The green energy, which supposed to come from Africa, was suddenly available in Germany.

The partners dissolved the planning committee of the project after a meeting on Monday in Rome. What remains is a company, which has significantly fewer employees and a narrowly defined scope as a consulting firm with expertise in renewable energy in the Middle East and North Africa. The number of experts total fewer than 10. Desertec wants to continue to look after the 70 largely unfinished projects for wind and solar energy in the deserts of Africa. The green energy coming from these sites is now supposed to flow into regional networks rather than to Europe.

“The moon landing these days isn’t that interesting,” said Desertec director Paul van Son, in reference to the lofty comparisons once made.

But Mr. van Son has a hard time explaining why Desertec lost so many blue-chip partners in recent years.

“Some companies pulled out of solar energy,” he said, hinting at Siemens.

Other companies miscalculated the “realities of the market,” namely the costs, he said. In reality, the infighting among the 50 large companies beared down on the project like the sun over the Sahara.

Clear direction from the partners was missing on who should invest what sums in the power plants and high-voltage power lines. Desertec was already making headlines last year about serious organizational problems. But by then, the large corporations were already hopelessly estranged, and Mr. van Son was embroiled in an internal power struggle with his co-director Aglaia Wieland.

Geo-political issues also cast a shadow on the ambitious solar project. The fact that Germany called for an energy transition to renewables after the Fukushima nuclear catastrophe in Japan presented the project’s backers with unexpected challenges: the green energy, which supposed to come from Africa, was suddenly available in Germany. The state of Bavaria alone now covers 35 percent of its energy needs through local renewable energy sources.

Desertec The Unfulfilled Dream

 

And the costs of green energy have fallen rapidly in recent years, partially due to the drop in prices of photovoltaic systems. The boom in wind and solar plants in Germany has even led to overcapacity in electricity generation.

The other large setback for Desertec came with the Arab Spring. Investors suddenly avoided strife-ridden countries in the Middle East and North Africa.

Mr. van Son tried at the time to change course and to put the emphasis on the African market, which is promising because of the rising population and economic growth. But his attempt to alter Desertec quietly from a global project to a regional one failed. Ms. Wieland was especially opposed to the plans to cancel the delivery of electricity to Europe, which would remove the heart of the idea. And she clung to a €600 million pilot power plant. It will, however, never be built and Ms. Wieland has since left the project.

Despite these events, Mr. van Son vehemently denies that the dream of desert energy has finally faded on the horizon. His personal future will nevertheless no longer depend on the ill-fated project. At the end of the year he will be moving to a new job at the energy company RWE.

 

Andreas Macho is an editorial trainee at Handelsblatt. To contact the author: andreas.macho@vhb.de

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