Genesis Morocco: Desertec's days appear to be numbered

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Genesis Morocco

Project Genesis is a strategic sustainable development framework for Morocco to translate from being a net importer of energy and a country facing water shortage issues, into the number one producer both of clean renewable energy and water in the region.

Wednesday, October 8, 2014    <<Home

Desertec's days appear to be numbered

The Desertec Industrial Initiative (Dii) consortium originally set out a grand vision of supplying large-scale solar energy from the Middle East and North Africa to Europe and brought together leading solar developer and financial institutions to help achieve that ambitious goal.

A series of setbacks have hampered the endeavor, however. On Wednesday, German newspaper Sueddeutsche Zeitung reported that indecision about Dii's continued financing by its shareholders and associated partners – among them ABB, Abengoa Solar, Enel Green Power, First Solar, Soitec, SMA and Deutsche Bank -- was threatening the future of the company.

The news follows the announcement last month that Dii CEO Paul van Son would be exiting the company at the end of the year. Dii says a successor will be announced as soon as the company’s shareholders have reached a final decision.

The departure of a number of high-profile companies from the consortium earlier this year likewise overshadowed its once bright future. In April, German utility giant Eon, construction and engineering group Bilfinger and banking group HSH Nordbank announced their withdrawal from Desertec in what was then widely seen as a major blow to the project.

According to the Sueddeutsche Zeitung, Dii's shareholders and partner companies have for months been unable to agree on a future concept for the group and time is running out: Dii's contracts with affiliated companies are due to expire by year's end. Only a binding commitment for a new budget can ensure Dii's survival, but so far there is no sign of one, according to the newspaper.

An unnamed industry insider tells the Sueddeutsche Zeitung that the likelihood that Dii will have to shut down its operations by the end of the year "grows every day," adding that there is no financial basis for a continuation of the company.

Speaking to pv magazine, Klaus Schmidtke, Dii's head of communications, declined to comment on the article, confirming only that Dii shareholders would meet on Monday to discuss the issue.

Sources in the know tell pv magazine that the meeting, taking place in Rome, will revolve around the future financing of the company's operational costs, said to be €2 million a year, which cover expenses such as office space and staff.

If there is no consensus on Dii's annual budget, shareholders are expected to review a "plan B" that entails the company's commercial activities, such as providing geographic information and irradiation data reports. While many of Dii's shareholders are solar developers, the company itself focuses on data gathering, knowledge sharing, preparing studies and consultation. Dii has focused most of its activities on Morocco, Saudi Arabia, Egypt and Turkey.

Desertec launched in 2009 with the aim of generating and transmitting solar and wind energy from North Africa and the Middle East to Europe as of 2020 and providing up to 15% of Europe's power by 2050 at a cost of some €400 billion ($507 billion). Yet political instability in the region and conflicting goals among initial Desertec partners hampered the initiative’s development.

The non-profit Desertec Foundation, which had strong backing from the German government, parted ways from the Dii consortium of multinational companies last year, citing "irresolvable differences" between the two organizations over strategy, communication and management style.

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