July 13 2009 may one day be remembered as the start of a new era in renewable energy development. At that date 12 European finance, engineering and electric companies signed a memorandum of understanding for the development of large-scale solar thermal electricity generation in the Sahara, from which to supply Mediterranean and European countries with solar electricity.

By doing so they took the first concrete step for the realisation of a 30 year old vision of European scientists and engineers. The first stage will consist of feasibility studies exploring the technical and economic feasibility and setting out the steps to be taken for a go-ahead after 2012.

The obstacles in the way are huge.

The most important one is the cost differential between solar thermal and fossil-powered electricity generation. At present, solar thermal electricity costs 2-4 times more than fossil electricity (10- 20 cents against 5 cents). Fossil electricity costs are, however, expected to go up and solar thermal electricity costs to fall, due to rising oil prices and climate policy measures on the one hand and economies of scale for solar power generation on the other.

European climate policy will certainly become a defining factor for the profitability of the project: European power companies will have to supply rising shares of their electricity from non-fossil sources. By 2030 that share should have risen to at least 30 percent. Imported solar electricity will therefore become an increasingly attractive alternative to wind power and carbon capture & storage.

Political considerations will loom large in the project. In view of ensuring an optimal security of supply, the EU should conclude “solar energy partnerships” with interested North African countries. These should define the legal framework under which European operators may be authorised to generate power, build transmission lines etc. Local power companies should be encouraged to join as share holders.

The fees for leasing territory for the power plants and the high–voltage direct current transmission cables should be a matter for direct negotiations between local governments and companies.

Very preliminary estimates put the total amount of investment to some € 400 billion, 10 percent of which for power transmission. That seems a huge amount, but is in fact very moderate figure: the construction will spread over 30 years and solar power from the Sahara may cover 15-20 percent of European/Mediterranean electricity demand in 2040/50.

The launch of DESERTEC should teach us two lessons:

· The transition to a low-fossil energy regime requires policy makers and energy companies to act in very long time horizons.

· Energy companies should prepare in time for the mid-century and start acting now, if they see a reasonable chance of succeeding.

The chances for DESERTEC to succeed are good because experienced engineering companies join hands with major power companies and strong financial institutions. Last not least, the political class supports the project as a major contribution towards emission-free electricity generation.

Brussels 13.07. 09 Eberhard Rhein