14 November 2011
Desertec is an initiative to develop a sustainable energy supply in the desert regions in the Middle East and North Africa, known as MENA. In October 2009, Dii was formed as a limited liability corporation to advance the Desertec vision, and Paul van Son was appointed CEO of that corporation. Mr. van Son has held various management posts in the European energy industry, including Managing Director of Deutsche Essent (Germany) . He is also Chairman of the European Federation of Energy Traders (EFET) and Chairman of the Energy4All Foundation, which is active in Africa.
“The project itself will likely be implemented by using different technologies and a number of suppliers.”
Andreas Breyer, Contributing Editor for Solar Novus Today attending the second annual Dii Desert Energy Conference, held earlier this month in Cairo, where he had a chance to sit down with Mr. van Son. They discussed the goals and challenges of tapping the desert’s vast resource for use in both local and remote markets.
Mr. van Son, can you describe the current status of the reference project planned in Morocco?
The magnitude of this first expansion stage in Morocco is a total of 150 MW and an investment of approximately 600 million Euros. This is an important benchmark for all parties involved. Out of these, one third of the sum, namely 200 million Euros of equity will be provided by the industry. This is a very strong commitment of the industry to the project. Another precondition, however, is that the financial concept includes certain support from the governments. Here, the discussions are already underway for some time. The German Government as a strong supporter is particularly keen that also other countries support the project. Currently we are in state where we define the project, so regarding the construction start I do not know the exact date yet. But we are in a very advanced state in which we will soon be are able to show feasibility of the project. The exact location is not yet defined, there are a few possible sites that are already identified, and the distance to the grid is an important issue we have to care about.
The project itself will likely be implemented by using different technologies and a number of suppliers, meaning that it is still not 100% defined what technologies are used in which share. It will most likely include CSP technology, but we do not exclude a portion of PV.
What are the processes of the tender?
In this process Dii only acts as enabler. We are currently defining the project in order to determine if it is feasible. For this we do a cost analysis, we set up a financing model etc. So our role is to create a business case where we and all others involved get the impression: Yes, this thing can fly! We are still in the process to bring all this together. CSP technology has clearly earned a chance to prove itself with the support of start-up incentives, just like it happened with PV and wind in the last decade. Another major goal of Dii is to bring down the cost level of these facilities through the learning curve to a competitive level as soon as possible. Wind, though, will not be considered at this stage, because this technology is already well established.
Part of this first phase is a test run on energy exports to the existing cable line from Morocco to Spain.
Reference projects like this by nature have lighthouse character. But that is only one part of the story. What really counts in my opinion are questions of network development, market capability and market stimulation for such technologies, which funds are being brought in, etc. All this we currently evaluate in the context of the roll-out plan, which is going to be published by the end of next year. Of course we are talking with transmission system operators (TSOs) such as ENTSO-E; which are dealing with these issues.
From your point of view: How can the necessary expansion and conversion the European networks be done?
Dii is a catalyst for the power network debate in Europe. Since we exist these issues have come back on the agenda. Planning horizons of 40 years, as we use them, were not the case before in grid planning. By this, we contribute to the discussion on the restructuring of the European grids.
How can we stem the necessary investments?
The whole issue is nothing new for the network operators. Even without our initiative, the locations where energy is being produced change because of the expansion of renewables in the EU. If you shut down nuclear power plants, the capacities must be built up somewhere else sooner or later, and subsequently the grid must be adapted.
How can we do this at a European level? France sticks to its nuclear energy policy and therefore has little interest in energy from the desert.
No one can say that the world will always be like it is today. France also has to adjust to different situations in the future, and in a future European network no country can isolate its grid from the neigbours. When Germany expands its grid interconnection between North and South, this already has impacts throughout Europe. Spain already has two cable connections to Morocco with 1,400 MW and has been supplying electricity to Morocco for 15 years. In the future, Spain could be a transit country for energy and raise transmission fees for the desert energy.
What about the compensation?
In the upcoming transition period we definitely need remuneration instruments. This can be a feed-in-tariff, but there are other possibilities, such as minimum purchase commitments, which will then find a market price.
What would you prefer most?
The key issue is the overall business case. Important at the moment is that a stimulating and stable investment climate is set up. Here, mainly the European governments and the EU Commission are requested, and of course also Morocco itself. Surely it would be very nice if Brussels could speed up the whole development in close cooperation with Member States.
Mr. van Son, thank you for the interview.
Andreas Breyer is Contributing Editor - Germany for Solar Novus Today
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