Munich Re, the world’s largest re-insurance company, has announced plans to invest heavily in the Desertec project, which will install solar power plants in North Africa. The German-based company plans to invest 400 billion euros to construct plants in the North African Sunbelt, which lies in the Sahara Desert. Research firm, iSuppli Corp., believes this could mark the beginning of the end of the use of fossil fuel and nuclear technologies for electrical generation.
Plans over the next 10 years include the construction of concentrating solar thermal power (CSP) plants for electricity production as well as an up-to-date electrical grid in the Mediterranean region. Besides Munich Re, the project’s partners include, Siemens, Deutsche Bank, and RWE, along with 15 more invited to participate in the group.
Henning Wicht, the senior director and principal analyst for photovoltaics at research firm iSuppli, says that beyond “the major impact of Desertec itself, the project is set to spur a new wave of other solar power plants and projects, marking a historic shift from traditional electrical-generation techniques to solar power.”
“Desertec represents a number of milestones in the history of the solar business. For one, it marks the first time that private companies will invest in a long-term renewable-energy endeavor of such vast size. Furthermore, leading companies have never undertaken such major risks to invest in a relatively new technology amid an uncertain political environment and missing infrastructure.”
Continuing, Wicht adds that “insurance companies traditionally have been risk-averse investors. The participation of Munich Re provides priceless value and credibility for future renewable-energy projects. Because of these factors, Desertec is likely to be followed by other initiatives. iSuppli expects China will move quickly on similar projects because of its eagerness not to miss out on the future of the renewable energy business.”
Through generating and selling electricity from the desert, the private companies investing in Desertec expect a good margin of profit. In a Greenpeace-sponsored study, the Wuppertal Institute of Energy judges that by 2050, the CSP industry will have a $2 trillion revenue and create 600,000 jobs around the world, which is equivalent to the number of jobs in the German automotive industry today.
The German solar industry will be the main supplier of equipment for the power plants, while other suppliers include Flabeg and Schott Solar with CSP systems, Siemens with its steam generation turbines, and both MAN Ferrostaal and Solar Millennium, which are veteran project developers for concentrated solar power systems.
iSuppli also contends that photovoltaic (PV) and concentrated PV systems will complement Desertec’s variety of technology. In addition, PV suits the location well, as it has no need for water in producing electricity.
In mid-July, the Desertec partners will meet to officially announce the consortium, with iSuppli covering the event from Munich. Wicht’s upcoming report on Desertec, Market Outlook for 2009 and 2010: Where Will Prices Land? will provide more information about the project and is accessible by contacting the company at [email protected].