The Desertec Industry Initiative (Dii), an ambitious private-sector collaboration to produce 15% of Europe’s energy needs from solar power plants in North Africa and the Middle East by 2050, continues to attract big-name investors even as sceptics question its prospects for success.

The Dii was launched in July 2009 as a limited liability company to translate into reality a vision conceived in 2003 by the Club of Rome’s Trans-Mediterranean Renewable Energy Co-operation and nurtured by the Desertec Foundation.

In that vision, the deserts of Africa and Arabia are not vast expanses of barren land but, in the words of Dii’s CEO Paul van Son, “landing places for energy from our big, remote nuclear fusion reactor: the sun". According to Desertec, the world’s deserts receive enough energy every six hours to fuel mankind for an entire year.

Dii began with 12 founding members or shareholders and it is now up to 17 with more on the way. German companies dominate, but its make-up now includes Swiss, Spanish, Algerian, Moroccan, Italian and French firms. There is also an associate partner category with 25 members.

Each shareholder agrees to make an annual contribution of €150,000 for a three-year period to give Dii time to come up with an investment strategy – a far cry from the €400bn some news reports said Desertec planned to invest. Dii spokesperson Alexander Mohanty says the €400bn was an independent estimate of what it would cost to accomplish similar goals.

The company insists, and outside experts agree, that technology is not an obstacle – it already exists. Desertec favours the use of concentrated solar power (CSP), a method that uses giant mirrors to focus the sun’s rays on a central collecting point, enabling solar heat to be stored cheaply and efficiently. And an undersea cable already enables electrical power to flow between Spain and Morocco, although much more capacity would be needed.

“As far as I’m concerned, the only issue is political. The technology is there,” says Ken Zweibel, director of the George Washington University Solar Institute in Washington, DC.

Challenges to overcome

The most difficult tasks, says Mr Mohanty, is to develop a market, a favourable regulatory environment and political harmonisation that supports investment, not only from Dii shareholders but from others. That means determining how much energy can be generated, how much will be needed to satisfy local demand, how much will be available for export, and an appropriate pricing structure. A European subsidy may also be needed to make up for the higher cost of solar power.

Reactions from potential host countries have been mixed, despite the prospects for employment and investment the Dii is potentially offering. Algeria has already indicated it will not participate, even though one of its biggest companies, Cevital, is a shareholder. Morocco has indicated it will allow Desertec to establish a reference project in the country to test market demand. However, the project still needs investors. Tunisia also appears supportive.

However, sceptics remain. Jon Marks, editorial director of African Energy newsletter, points out that no European grid currently exists to distribute the power that would be generated by the Desertec initiative; Transgreen, a French consortium formed to lay a network of undersea electrical cables connecting Europe and North Africa, is still in its infancy. Nor does Europe have fully liberalised markets for electricity, Mr Marks adds.

Other experts predict payday will be a long time coming. But if and when it does, Desertec shareholders could be in for a bonanza.

IN FOCUS: Desertec's investors

In addition to the Desertec Foundation, Dii’s 12 founding members included some of Germany’s biggest financial institutions, such as Deutsche Bank, HSH Nordbank, insurer Munich Re, and two of Germany’s largest utilities E.On and RWE, as well as leading German engineering and construction firms with interests in renewable energy, including Siemens, M&W Group, Schott Solar and MAN Solar Millennium. Other founders included the Swiss company ABB, a leader in power and automation technologies, Spain’s Abengoa Solar, which constructs and operates solar energy plants, and Algeria’s biggest conglomerate, Cevital.

Dii has since added five more big names to its shareholder list: Morocco’s Nareva Holding, Spain’s Red Eléctrica de España, Italy’s Enel Green Power, Germany’s Flagsol, and France’s Saint-Gobain Solar. More investors are on the way, one from Italy and another from Tunisia, according to Dii spokesman Alexander Mohanty. Talks are also under way with firms in Turkey and Egypt.