Europe must act to make green desert project work-Desertec head

Wed Jun 12, 2013 6:24am EDT

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* Desertec to publish policy proposals by end-June

* In talks with Asian companies about membership - van Son

By Christoph Steitz

FRANKFURT, June 12 (Reuters) - Europe needs to step up support for an ambitious plan to import cheap solar and wind power from African deserts or face a jump in power prices on the continent over the next few decades, the head of the Desertec project said.

The Desertec Industrial Initiative (DII), a consortium set up in Germany in 2009, envisages Europe could import up to a fifth of its electricity from solar and wind parks in North Africa and the Middle East by 2050, thereby saving 33 billion euros ($43.8 billion) in costs per year.

Desertec claims that within six hours, deserts receive more power from the sun than can be used by mankind in a year.

But with a projected budget of 400 billion euros, the project is regarded as too expensive and too risky - partly due to unstable political conditions in North African countries. It also needs strong political backing by Europe.

"Europe needs to act now, otherwise nothing will happen," Paul van Son, DII's chief executive, told Reuters in an interview late on Tuesday.

In a bid to increase political backing for the project, DII will later this month publish a study which will include policy proposals for European governments about how they can make the Desertec project work.

"If Europe does not wake up, it'll get much more expensive for its citizens," van Son said.

Rising power bills have been a problem on the continent, above all in Europe's top economy Germany, where subsidies to expand renewable energy have inflated household energy bills.

POWER POTENTIAL

Spread over 6,500 square miles, which is more than half the size of Belgium, Desertec's projected delivery of more than 1 terawatt hours (TWh) would be almost enough energy to power the whole of Germany for two years.

Van Son said that while incentive schemes had boosted the expansion of wind and solar in Europe over the last decade, conditions for renewables were in fact much better in the Middle East and Northern Africa region, where the sun beats more strongly.

"It's a fact that you can build photovoltaic and wind plans in Northern Africa without any subsidies," he said, but added that the access to capital in the region was still a challenge.

Van Son said that wind and solar power could be produced at costs of between 50-100 euros per megawatt hour (MWh) in North Africa, even undershooting costs of 116 euros per MWh for nuclear power in parts of Britain.

Last year, DII lost two prominent shareholders - German engineering conglomerate Siemens and automotive supplier Bosch. They left the venture after unsuccessful forays into the solar sector at a time when it was hit by global over capacities and price declines.

Other shareholders of the DII include German reinsurer Munich RE, utilities E.ON and RWE , as well as Deutsche Bank.

Other companies outside of Europe are showing interest in the DII, including Chinese power company State Grid Corp , van Son said.

"The process (talks) with State Grid is ongoing. But we are also in talks with other Asian companies about a possible membership."

($1 = 0.7533 euros) (Editing by Jeff Coelho)

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