Desertec shareholders jump ship as solar project folds

FRANKFURT/MUNICH, Oct 14 (Reuters) - An ambitious project to harness and export solar power generated in Middle East and African deserts has all but folded after the withdrawal of most of the Desertec Industrial Initiative’s shareholders.

The multi-billion renewable energy project, founded in Germany to much fanfare five years ago, aimed to help to provide up to 15 percent of Europe’s power from solar and wind parks in North Africa and the Middle East by 2050.

Desertec said on Tuesday that following a meeting in Rome this week only three of its 19 existing shareholders had decided to stay on board: Saudi Arabia's ACWA Power IPO-ACWA.SE, Germany's RWE and China's State Grid.

They have decided to continue the project in an “adapted format”, Desertec said, adding that it would now function as a service company in the Middle East and North Africa.

Former shareholders include Germany’s Deutsche Bank , reinsurer Munich Re and Swiss conglomerate ABB.

“Costs were very high and some companies said we’re not that interested in the Middle East and North Africa,” Desertec Chief Executive Paul van Son told journalists, trying to explain why so many shareholders had left.

Desertec’s aim was to capitalise on the desert sun, which it estimated could provide more power in six hours than mankind could use in a year.

Spread over a 6,500 square mile area more than half the size of Belgium, Desertec’s projected delivery of more than 1 terawatt hours (TWh) would have been almost enough energy to power the whole of Germany for two years.

But early on industry analysts had highlighted that northern African states carried significant political risks and warned that at an expected budget of 400 billion euros ($506 billion) the project was too expensive to be practical.

Also, Europe has had its own solar power boom, raising questions about the need for imports.

As a result, a number of major shareholders had already left the project in the past few years, including Siemens, Bosch, E.ON and Bilfinger.

$1 = 0.7901 euro Reporting by Christoph Steitz, Jens Hack and Maria Sheahan. Editing by Jane Merriman