The global insolation map has three notable patches: one in western Australia, another in the south-western US, and the last stretching from Algeria across North Africa all the way to Saudi Arabia. It is in these regions where the most sun hits the ground, creating the greatest potential for solar energy. The large swatch in the Middle East and North Africa (MENA) region is of particular interest these days. It runs through countries that are fast growing and in need of additional sources of energy and new exports. And the virtually untapped solar power is not far from Europe, a continent that has a huge demand for alternative energy and a relative lack of sunshine. Around the globe, governments and industry have recognised this opportunity and are pushing to turn unexploited solar resources in the MENA deserts into real energy that can be transported regionally and northward. One strong example of this has been in Indonesia.
The story being pitched is sensible, believable and quite compelling. The Sahara Desert gets about 3500 hours of sunshine a year, as much or more than the best areas for solar energy in the US. In theory, just 0.3% of North Africa’s desert could supply all the electricity needs of both MENA and the EU – six hours of sun hitting the world’s deserts could power the entire world for an entire year. Importantly, the land in question is for the most part uninhabited, making the argument just that much more interesting. Clean energy could be created without disrupting lives or crowding out crops. 100% RENEWABLE: The context is important. The EU has set an ambitious goal of supplying all its energy from renewable sources by 2050, by which time it is also hoping to reduce its carbon emissions by at least 80%. To help it achieve those targets, connections to the desert assets of North Africa are being considered and actively pursued. The Desertec Foundation, an organisation working to develop solar power in North Africa that can be transmitted to the EU grid, believes that 15% of Europe’s energy needs can be supplied by desert-based installations by 2050. The governments accept the need to cross the Mediterranean, and official policy is being written to support international trading. The EU’s Renewable Energy Directive calls for 20% renewable energy by 2020 and permits member states to import energy from non-EU countries to meet their respective quotas. Fukushima is also helping to drive Europe toward a desert solution. After the nuclear accident in Japan, Germany decided to phase out nuclear power by 2022. This policy has made finding renewable energy sources a priority, as Germany gets 23% of its electricity from nuclear plants. As a result, the country has been a leader in the promotion and development of North African desert-based solar installations.
MENA’S POTENTIAL: The situation in the MENA region is conducive to the building of solar capacity in the desert. In the 20th century it was the fastest-growing part of the world: the population of MENA in 2000 was 3.7 times what it was just 50 years earlier, data from the World Bank show. While the fertility rate has fallen (from 6.9 births per woman in 1960 to 2.7 in 2010), it has been more than balanced by an increase in longevity (with average life expectancy at birth rising from 46.4 years in 1960 to 72.4 in 2010). This has left countries such as Egypt with some serious challenges, including overcrowding, a high rate of youth unemployment and a lack of resources (only 2.9% of the country’s land is arable). At the same time, the oil riches that once supported a number of regional economies are beginning to run out.
ENSURING SUPPLY: According to the World Bank, MENA as a whole became a net importer of energy in 2011. In 2010 net exports of energy were equal to 148% of energy use. The following year, the region’s net imports of energy were equal to 87% of its use. Inflation, which has been a problem for years in a number of countries in the region, will now feed through more directly to the more vulnerable economies and could stir discontent. A priority is to ensure future energy supplies. Even the oil-rich nations know that there will come a time when the commodity will run out, and alternative energy is one way to guarantee access to power when that day comes and could even become a future source of export revenues.
Since the 2010 Arab Spring, the renewable power trend has strengthened. Before the uprisings, about 10 separate nuclear programmes were in the works in Arab states. They were being pursued in part to address demographic pressures, in particular to power large-scale desalination plants to ensure access to safe and clean water. After the uprisings, most new nuclear projects in the region came to a halt. The lack of strong governments and in some cases the rise of representative governments made it difficult to pursue potentially controversial programmes. Investors have also backed off, viewing the new governments as untested.
Importantly, priorities have changed. There is a growing sense in the region that countries need to develop in a more balanced way that brings prosperity to the greatest numbers. Support for alternative energy development, regional cooperation and the export of electricity have increased as a result of this.
MASSIVE PROJECTS: Across MENA, solar infrastructure is being established in the desert. Morocco, a country highly dependent on imported oil, has embarked on a $9bn plan to build five alternative energy power stations by 2020. Algeria, an OPEC country reliant on oil revenues, has said it will spend $60bn to develop alternative energy capabilities and is aiming for 650 MW of renewable power by 2015 and 22 GW by 2030 – 12 GW for domestic use and 10 GW for export. Tunisia plans to start building the massive 2-GW TuNur solar project in 2014, with the aim of generating electricity there by 2016, while Libya announced a $3bn solar programme in 2010. Egypt’s 150-MW Kuraymat solar power plant has been operational since June 2011. Countries in the Gulf region are gearing up too. In Saudi Arabia, officials from the King Abdullah City for Atomic and Renewable Energy have called for building 41 GW of solar capacity over the next 20 years. In early 2012 Dubai launched the Mohammed bin Rashid Al Maktoum Solar Park, a long-term project set to increase solar energy production over time, working up to 1 GW by 2030. In Abu Dhabi, Masdar Power, a developer and operator of renewable power projects, has announced that the $700m, 100-MW Shams 1 project will be complete by the end of 2012, and there are plans for a second 100-MW plant.
REGIONAL GRID: These projects will be brought together via a regional grid that will extend across North Africa through to the Middle East and across the Mediterranean to Europe. The plan is to have an interconnected and unified network that will allow electricity to be transported within and between Europe and MENA. There are already connections between Morocco and Spain, Morocco and Algeria, Algeria and Tunisia, Libya and Egypt, and Tunisia and Libya. Many of the links have been around for years – Morocco and Spain were connected in 1997. In fact, even now all of North Africa is on a grid that is connected to the EU.
Official efforts have been behind the realisation of the grid. The idea of the Mediterranean Electric Ring has been on the EU agenda since 2001. The concept has since been modified to include more advanced links and to receive additional support from a number of companies and associations. MedGrid, a Paris-based industrial consortium, was founded in 2010 to promote the building of the Mediterranean grid. Its members include French firm Alstom and Germany’s Siemens. Shareholders and associate members in the Desertec Industrial Initiative include such giants as Deutsche Bank, Audi and BASF, all hailing from Germany, along with British multinational HSBC and US multinational IBM. In 2011 a memorandum of understanding was signed by Medgrid and Desertec to work together in making the desert solar vision a reality.
POTENTIAL ISSUES: Similar to many grand projects, the MENA-EU alternative power grid has its share of challenges. While solar technology has been around for years and is becoming increasingly efficient, it is still very expensive. In a study conducted by the US Energy Information Administration, solar power facilities cost around four times more per KWh to produce than a conventional oil-gas combined-cycle plant. In addition, despite tremendous improvements, solar panels still do not produce as much power as a conventional plant. Photovoltaic cells convert sunlight into energy at about 10-20% efficiency and generate electricity costing around $0.18-0.30 per KWh. The theoretical maximum efficiency of current technology is 31%.
The very nature of solar energy makes it problematic. Unlike conventional power sources, the output cannot be adjusted to demand, so the utility has to have oil or gas generators ready should production fall too low. Excess energy also needs to be stored. Batteries are inefficient, expensive and usually toxic. Other solutions might be clean, but they are expensive, hard to adjust and often unworkable in certain environments, such as hydro storage in the desert. Clean energy is often not all that clean as the batteries usually contain lead, and the cells themselves can contain arsenic, cadmium, hexafluoroethane, lead and polyvinyl fluoride, many of which can find their way into the environment during manufacturing and disposal. Solar panels could be the world’s next great toxic waste problem.
Most of the projects in North Africa utilise concentrating solar power (CSP) technology. These systems do not use photovoltaic cells, but employ arrays of mirrors to concentrate the sun’s rays and heat a transfer fluid that is used to power a turbine. The advantage is that the transfer fluid can be stored and used to produce electricity at night. CSP technology has also been historically cheaper than photovoltaic cells per KWh produced. But CSP has some downsides. While it has been around for decades, the technology has never been used on such a massive scale and there are questions about its effectiveness, cost, optimisation and system design. Critics wonder whether CSP systems can really store energy efficiently and whether it will be possible to maintain so many mirrors in a desert climate at a reasonable cost, especially if water is needed for cleaning.
GRIDS & LINES: The greatest challenge for the joint MENA-EU solar vision is transmission. While a grid does exist in North Africa, it is rudimentary and not at all appropriate for the task. The Morocco-Algeria-Tunisia connection is relatively good and has a solid link with Spain. But the Tunisia-Libya section of the grid was not operational as of June 2012. And while Libya and Egypt are technically connected, the link is quite limited. A 2005 attempt to synchronise the grids failed and the transmission capacity is currently a third of what it should be. Moving away from Europe, Syria’s transmission lines with Turkey have been unstable of late, and limited options exist between Syria and Egypt via Jordan.
FALLING SUBSIDIES: The challenges in the West are somewhat different, with economic difficulties leading to a significant drop in subsidies, tax credits and preferential tariff rates for solar. In crisis, the developed world simply cannot afford to support the industry like it once did. This raises a lot of questions concerning the future of the technology. Incentives are needed so the industry can achieve the critical mass necessary to make it competitive with conventional power generation. The decline in official support also further clouds the future of MENA solar farms. While there is a lot of policy inertia, the grand project is going to take considerable state funds, and that money may simply not be there. In the autumn of 2012 it seemed that the challenges were beginning to threaten the vision of a desert solar solution for Europe. Siemens and Bosch both pulled out of the Desertec Initiative, while Spain was reconsidering its support for three Moroccan solar plants. Plenty of stakeholders are still in the game, and Desertec and many of its related projects are still in the works, but second thoughts by corporations and governments might slow the implementation of the overall plan or require adjustments to it.
But other parts of the developing world may experience surprising growth in solar generation capacity regardless of what happens in the West. While no region can match the solar resources of North Africa in terms of the sheer size of the productive area, a number of countries outside the EU, the US and MENA are particularly well-placed for the utilisation of solar technologies. It is a different story from that in MENA. It is not one of massive solar farms feeding wealthy countries; it is more one of smaller projects being developed for local demand. For that reason, it may in the end be the story. Plans and projects in South-east and South Asia and South America are not dependent on international coordination and politics, the economies of the West and the transmission of power over distances virtually unprecedented. Demand is at home, and in some cases manufacturing will be there too.
DECLINING COSTS: The growth of solar started relatively late in much of the developing world and has come in fits and starts, but it is very possible that activity will pick up and that the ambitious targets will be met. Just as countries are beginning to focus more on promoting renewable sources, the photovoltaic market has crashed as a result of manufacturing overcapacity in China. The price per watt for photovoltaic modules fell from about $2.75 in 2009 to about $1.00 at the beginning of 2012, and recent spot price reports put average module prices at about $0.62 per watt. Prices are so cheap now that people are starting to talk about grid parity – the point at which a given alternative energy is as cheap as energy from conventional sources – especially in places where electricity costs are high. There are uncertainties, however. The overcapacity may be temporary; the world’s largest solar panel maker, China-based Suntech, has been pushed to the brink of bankruptcy, while more than 20 solar manufacturers in the US and the EU and 50 small Chinese manufacturers have folded. The glut may indeed pass, and a cost-reflective price for solar cells may again assert itself.
SOLAR RUSH: The campaigns have in fact been a bit too successful in Thailand. More than 1000 applications for over 5 GW of solar power production had been filed by 2009, and the government became concerned that the rush would leave the country with too much expensive solar power, as it was offering a tariff more than three times the going rate and would be responsible for the difference. There was also a concern that most of the applicants were merely solar speculators, seeking to buy rights that could be sold later. The government has since amended the programme. The adder was reduced to BT6.50 ($0.21) per KWh from the original BT8 ($0.26) per KWh for all applications submitted but not yet approved as of June 28, 2010. In addition, the government stopped taking new applications as of that date and is now considering a fixed rate for solar power rather than an adder rate.
At first, very little was built, confirming worries about speculation. But in 2011 and 2012, a number of major projects commenced and quite a bit of capacity came on-line. Solar Power Company, a local firm, had completed nine of its 34 planned projects by August 2012, for a total of 55 MW of capacity, and it hopes to have all its projects finished by the third quarter of 2013, bringing the group’s total to 242 MW. Thailand-based Natural Energy Development built a 73-MW solar farm in Lopburi. Bangchak Petroleum and DuPont Apollo have completed plants in the country, as well.
Elsewhere in the region, progress has been slower. Construction of Malaysia’s first solar plant did not start until early 2011. The project, undertaken by Tenaga Nasional, the country’s largest utility, is in the buffer zone of a conventional power plant and is designed to help the company gain experience and test different technologies and configurations. It is also a showcase project in support of the government’s renewable energy initiatives, with the country aiming to build 1.25 GW of renewable power capacity by 2020. However, political bottlenecks could slow the process, making it more vulnerable to challenges from an increasingly vocal opposition. Another problem in Malaysia is the fact that most of the land suitable for solar farms is arable, and there is a trade-off between agriculture and power that needs to be considered.
Other countries have been slow to move into the solar arena. The Philippines has put a 50-MW cap on the amount of solar capacity that can be connected to the main power grid each year. It sees the technology as expensive, difficult to efficiently integrate with the grid and leading in some cases to corporate failures. As of early 2012, Indonesia only had about 13.5 MW of solar power capacity installed.
OPPORTUNITY: Indonesia is an ideal place for the adoption of solar as an archipelago of 17,500 islands in which a third of its 248.6m people have no access to the electricity grid. The economy is growing fast and the country is now a net importer of oil but national infrastructure is inefficient, old and poorly maintained, making the transportation of fuels for conventional plants expensive. Solar here makes a lot of sense, especially because the country’s average insolation rate stands at 4.8 KWh per sq metre per day. The government recognises the need and the potential and is now formulating a tariff as an incentive for development. A few large projects are being developed: in early 2012, Japanese electronics manufacturer Sharp said it was considering a 100-MW plant in Bali, and a 200-MW plant on Java is planned.
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