Clouds Gather over Desertec Solar Alliance

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- The proposed plan to generate up to 15% of Europe's electricity needs from massive solar farms in North Africa has suffered a series of setbacks in recent weeks with the departure of two key backers in less than a month.

The German-led Desertec Industry Initiative (Dii) (Munich, Germany) has lost the support of Siemens AG (NYSE:SI) (Munich, Germany) and most recently, industrial and automotive giant, Bosch Group (Stuttgart, Germany). The group has also run into problems with Spain, which recently failed to sign a Memorandum of Understanding (MoU) alongside other European countries that would have cleared the way for one of the group's major Moroccan projects.

The Desertec consortium of more than 50 companies is behind a hugely ambitious €400 billion ($550 billion) plan to build solar plants stretching across 6,000 square kilometres of the North African desert. The rollout is planned for the coming decades and will eventually supply up to 15% of all of Europe's electricity needs by 2050. However, after three years, the group has yet to start its first project.

Last month, Siemens pulled the plug on its solar power business, which also meant withdrawal from the Desertec initiative. The company claimed the sector was not a 'core competency' and said that its "expectations for its solar energy activities have not been met."

"The global market for concentrated solar power has shrunk from 4 gigawatts (GW) to slightly more than 1 GW today," explained Michael Süß, member of the Managing Board of Siemens AG and CEO of the Energy Sector, at the time. "In this environment, specialised companies will be able to maximise their strengths."

This month, Bosch announced that it would not be renewing its membership of the Desertec initiative due to financial difficulties. In a statement to the media, a Bosch spokesman said: "Due to a more difficult economic situation, we have frozen all our engagements and have decided not to continue our investment in Desertec next year".

Spain's decision not to join Germany, France, Italy, Malta, Luxembourg and Morocco in signing the MoU is a serious blow to the group, delaying the first of the group's projects, a 150 megawatt (MW) solar park in southern Morocco.

Desertec's Chief Executive, Paul van Son, this week defended the future of the initiative: "A crisis? What do you mean by a crisis? If this is a crisis, it's a positive crisis. We want to move on. I foresee changes in the coming time in the sense of more comings and goings [between members]".

With regard to Spain's reluctance, he claimed a positive decision would be forthcoming. "I'm confident that the other partners in this negotiation, from Morocco and the E.U. states, will be able to convince Spain soon as Spain could profit a lot."

At the end of last year, Desertec joined forces with another ambitious energy consortium, Medgrid. An MoU between the two allowed for the exchange of information, updates on progress, joint evaluation of potential synergies and to work together within the European Union (E.U.) and Middle-East and North Africa (MENA) to obtain a more favourable regulatory framework for renewable energy markets. For additional information, see November 30, 2011, article - Giant Desertec Project Boosted by Medgrid Alliance.

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