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(Adds Dii strategy, quote from analyst in last three paragraphs.)
Oct. 5 (Bloomberg) -- The Sahara solar initiative backed by German turbine maker Siemens AG and Deutsche Bank AG will sketch out plans in 2012 for its first power plant, a 600 million-euro ($800 million) station in Morocco, its project manager said.
Desertec, the venture aiming to generate power across the North African desert for Mediterranean-area consumers, needs a few more months of planning for its initial 150-megawatt pilot plant, Paul van Son, chief executive officer of Dii GmbH, the project management company, said in an interview in Munich.
Dii’s talks with European and North African governments to back the initiative are advancing “step by step,” even as upheavals during the Arab Spring ousted leaders in Egypt, Tunisia and Libya this year, van Son said. “I’m very confident that we will see concrete steps in 2012.”
The project founded in 2009 envisions an Egypt-to-Morocco network of solar-thermal plants, in which mirrors concentrate sunlight to heat liquids for powering turbines, as well as photovoltaic panels and wind farms. Electricity would be sold to the region and the excess exported to Europe, providing as much as 15 percent of the continent’s demand by 2050.
Overall investments may total as much as 400 billion euros, Dii has said. So far, no facilities have been built, which has Logan Goldie-Scot, an analyst with Bloomberg New Energy Finance, concerned that the project may not be realized.
North African countries are moving ahead with their own projects more quickly than Desertec, Goldie-Scot said. Morocco targets 2 gigawatts of solar capacity by 2020, with bidding for the construction of a 125-megawatt solar-thermal plant in Ouarzazate “in the final stages,” Goldie-Scot said by phone.
“Until Desertec actually puts a project on the ground and provides details on financing and the different stakeholders, it’s nothing more than nice ambition and a series of public announcements,” he said.
Dii shareholders including Deutsche Bank, Italy’s UniCredit SpA and Abengoa SA of Spain, are working to carry out the project while access to financing is becoming increasingly difficult amid the European debt crisis.
About 1.9 billion euros in investment are needed to develop the first 500-megawatt phase of Desertec, Dii says. Shareholders, including insurer Munich Re, may help provide financing or equity to build the first plant, van Son said.
The pilot plant should supply Morocco and Spain by 2014 if photovoltaic panels are used, and about two years later if it relies on solar-thermal technology, he said.
Dii chose Morocco to host the first plant as the country is stable, has a government that backs renewable-energy expansion and is linked to Europe via two undersea cables stretching about 25 kilometers (15.5 miles) across the Strait of Gibraltar, van Son said. The cables have free capacity of 400 megawatts to 1,000 megawatts, he said.
“Morocco is especially cash-strapped, and that’s why they’re eager to attract foreign investments and more willing to meet Desertec’s terms than some of the other North African countries,” said Samuel Ciszuk, an energy analyst for the region at Colorado-based IHS Global Insight Ltd. He spoke by telephone from London.
Aside from commercial and shareholder financing, the Munich-based initiative is in negotiations with governments in North Africa and Europe to secure state-backed grants and loan guarantees, van Son said. Dii then hopes for governments to buy the electricity via a power-purchase agreement, he said.
The company is preparing a study that simulates power network conditions in Morocco to find out more about the ideal technology for the first plants, van Son said. The study will run until the end of the year and its results may help convince potential investors, he said.
Dii aims to expand installations in North Africa and the Middle East with a wider goal to transfer clean technology, create jobs and meet the region’s entire electricity demand from renewable sources by 2050, van Son said.
The initiative is working on a feasibility study for possible projects in Tunisia and has talked to officials in Algeria, Egypt and Libya, countries that have seen upheavals during the Arab Spring uprisings.
“We’re seeing the start of a period of change in North Africa, and some countries may look very different in a few years,” Ciszuk said. “If Desertec can get things under way in Morocco, why shouldn’t there be more opportunities in Tunisia and Egypt in the mid-term?”
--Editors: Todd White, Randall Hackley
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