By Helios Global.
The search for new and alternative sources of energy remains one of the world’s most pressing challenges. To make an impact, these energy sources must be economically feasible, industrially viable, plentiful, practical, and easily accessible. In this regard, a number of trends involving solar energy demand in Europe, and North Africa’s potential to meet that demand, warrant a closer look.
Recent years have seen an increased interest in North Africa’s potential to provide solar energy to Europe. This trend is driven by a number of factors, including the growing concern over the environmental and economic impacts of fossil fuel dependence, and post-Fukushima worries surrounding the safety of nuclear power. Solar energy is renewable and clean. Advances in solar-derived electricity production, utilizing both photovoltaic (PV) generators – in which the sun’s rays are converted to electricity using solar cell panels – and concentrated solar power (CSP) plants – in which the sun’s rays are used to heat water to power steam turbine generators – have enhanced solar power’s profile as a valuable complement to petroleum and natural gas.
Additionally, traditional challenges to solar power’s viability as a reliable, marketable source of electricity on a regional or even global scale are closer than ever to being overcome. High voltage direct current (HVDC) power lines can transmit electricity over great distances with little volume loss, while breakthroughs in solar energy storage (using molten salt in heat transfer systems, for instance) make it possible to use solar energy collected during the day at night, when it is often needed most.
Given its geographic peculiarities and proximity to Europe, North Africa appears well placed to serve as a source of solar energy for Europe. The largest trading partners for North African countries such as Morocco, Algeria, Tunisia, and Libya, among others, are European. North Africa has enormous solar energy generating capacity, with vast portions of sparsely inhabited or uninhabited desert areas providing an attractive setting for large-scale solar energy infrastructure projects. European-directed initiatives like DESERTEC and Nur-Energie promise to harness the power of the plentiful North African sun, converting solar energy into electricity and then transmitting that electricity to Europe via HVDC lines. By connecting North African solar energy production plants to European energy grids, the DESERTEC Industrial Initiative aims to provide 15% of Europe’s electricity by 2050, producing 100 gigawatts – the equivalent of 100 nuclear power plants – of electrical power through a combination of solar, wind, and natural gas.
Outlook
Despite the theoretical advantages of a robust North Africa-Europe solar energy relationship, serious challenges have emerged. For a number of reasons, renewable energy projects often cost far more to implement than fossil fuel energy projects. The global economic crisis has also resulted in reduced enthusiasm for projects such as DESERTEC. European countries central to the effort to transmit electricity generated at North African solar power plants to Europe, such as Spain, have been hesitant to commit funds to the projects in an era of painful austerity. In late 2012, two of the most prominent private sector sponsors of DESERTEC, the German industrial firms Siemens and Bosch, pulled out of the $515 billion initiative. The withdrawal of major German partners is of particular interest, given the fact that Germany is one of the world’s largest investors in solar and other alternative energy projects.
From a technical standpoint, large-scale solar energy projects can be difficult and expensive to maintain, especially in the desert. For instance, the mirrors that are crucial to CSP plant operations can be easily damaged or polluted by sand and debris in the windy environment. These mirrors must be cleaned, and the CSP plants themselves must be cooled, requiring thousands of gallons of water a day. Given that water is a rare commodity in the desert, this raises economic and political questions concerning the practicality of solar energy production in North Africa, and the extent to which regional governments and local residents will be willing to have precious water resources diverted to the maintenance of energy production facilities.
Energy security concerns may also impact North Africa-Europe solar energy partnerships. The wave of popular unrest and residual political instability that has gripped the region may make Europe reluctant to depend on North Africa for significant portions of its electricity due to worries over sudden shifts in the regional political climate. That said, robust trade between North Africa and Europe continues, and North African suppliers continue to supply Europe with critical deliveries of oil and natural gas. Should North African countries establish solar energy relationships with their northern neighbors, the risk that these relationships would be disrupted is low, regardless of who gains political control of the solar energy production facilities. Just as the flow of energy resources between Venezuela and the United States has never been seriously disrupted despite political and ideological tensions, the North Africa-Europe solar energy trade would likely be insulated from any emerging diplomatic quarrels.
Risks
The key risks for investors in large-scale North Africa-Europe solar energy initiatives lie in their high cost, the technical difficulties inherent in the projects, and the political uncertainties currently surrounding their implementation. Though advances in long distance energy transmission and solar energy generation and storage have been made in recent years, these technologies and methods remain expensive and unwieldy. The start-up and maintenance costs of solar energy projects far exceed those related to fossil fuel projects, and at this point, fossil fuels continue to provide greater, and more reliable, energy outputs. This, combined with the ongoing economic crisis in Europe and the persistence of varying degrees of political instability in North Africa, makes the near-term prospects of large-scale solar energy trade between North Africa and Europe uncertain.
Opportunities
But despite near-term uncertainties, solar energy in North Africa has a promising future. The interest in Europe (and other developed and developing countries) in new and alternative sources of energy, including solar power, is genuine. Due to sustained global demand for oil and, increasingly, natural gas, the price for hydrocarbons will likely remain high. This has been the case even amid the global economic downturn.
The environmental concerns regarding continued reliance on fossil fuels is also affecting strategic-level decisions on energy security. The politics and controversy surrounding the nuclear sector also elevates the prospects for solar power. Germany, for instance, is proceeding to phase-out all of its 17 nuclear power plants by 2022. China has surpassed the United States as the world’s top investor in new and alternative energies, with a sizeable percentage of this investment earmarked toward solar power: In late 2012, China’s State Grid Corporation power company expressed interest in joining the DESERTEC Industrial Initiative.
The coming years will see advances in renewable energy transmission and storage, making solar and wind generation initiatives more attractive to foreign investors and suppliers alike.
To learn more about the prospects and challenges surrounding the solar energy sector in North Africa and related issues, or if you would like to be added to our distribution list to receive future editions of World Trends Watch, contact us. To learn more about Helios Global, visit us at our website. You can also follow World Trends Watch on Twitter at(@HGI_World Trends).
Helios Global authorizes the republication or reprinting of this analysis as long as it is accompanied with the following citation and hyperlink: “Prospects and Challenges for North Africa-Europe Solar Energy Initiatives” has been reproduced with the permission of Helios Global, Inc. Copyright 2013 Helios Global, Inc.”
