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World’s Biggest Energy Project Desterec looks dead with Siemens and Spain jumping ship

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Europe’s biggest solar project Desterec looks doomed with one of its founding member companies Siemens abandoning solar energy for good. Siemens facing lower margins and revenues had strategically decided to retreat from solar energy. Note Siemens was strong in solar thermal energy technology after it bought Solel Energy. However the company was not getting any traction or big orders as solar crystalline panel technology stole a huge march through dramatic cost reductions. Other solar technologies like CPV and thin film solar too are looking like lame ducks as solar panel price cuts have meant that solar energy has reached grid parity in a number of countries.

Read about Pros and Cons of Solar Power.

Siemens $400 million Solar Thermal Energy Solel Energy Acquisition goes Waste

Siemens had made a big bang entry into Solar Energy acquiring the leading Israeli company Solel Energy for $418 million. However Siemens like GE has never been able to replicate their wind energy turbine business success in solar energy. Siemens never won big solar thermal orders and now solar thermal technology is facing survival questions as solar PV technology has left other solar technologies far behind. It looks difficult for Siemens to get buyer for a technology which has been abandoned by even the pure play companies like Solar Millenium. Siemens which is the world’s largest green company has been facing a slowdown in revenues and profits in recent time as the whole green industry is suffering from overcapacity (wind, LED, solar). Now the company plans to completely get out of solar by selling its solar thermal business to a third party. Note GE which had announced a solar thin film panel factory with much fanfare too has put its solar energy plans on the backburner. Expect the rest of the electrical giants too, to abandon their solar power plans as well.

Spain too has decided not to sign a pact to build a 150 solar power plant in Morocco. Under the Desertec agreement, massive solar power capacity using the solar thermal technology would be built in African deserts and the power would be transmitted through undersea power cables to Europe. However in Greenworldinvestor we had noted 2 years ago that Desertec prospects did not look good and it was a white elephant eating money due to its myriad risks. Those doubts have now come true with two of the leading members of the DII consortium pulling out of the initiative.

Is the Humongous Solar Thermal Desertec Project a White Elephant Doomed to Fail?

There  are number of Points which I think  makes Desertec just a Dream rather than Reality:

1) High Costs – Desertec will apparently cost Euro 3.5/watt with another Euro  50c/watt cost for High Voltage Transmission. However these costs are too high  as Solar PV already costs Euro 3.5/watt and even on a conservative basis will have its costs reduced by 5% in the next 10 years making it attain half the cost of Solar Thermal Technology by 2020

2) Political Problems – The Desertec Initiative requires unprecedented coordination between more than 40  countries in Europe and MENA. A number of countries in MENA like Algeria, Morocco, Egypt etc are politically and socially volatile. There are already concerns being raised on the next phase of European Colonialism through this Energy Project. Some of the countries have disputed political boundaries. There are also no simple solutions to sharing of the costs and benefits.

3) Future Technology has a high probability of making CSP Obsolete – Solar Energy has become a Hotbed of Innovation with daily news of some new breakthrough in materials and process in PV Technology. Oerlikon has come out with a radial new a-Si Technology while CIGs player are touting increased efficiencies. Chinese Solar Companies have captured large chunks of the Solar Market through low cost leadership while number of Global Heavyweights like Posco, Samsung, Hyundai, Sharp, GE, TSMC promise to further decrease these costs. To bet Euro 400 Billion on a Technology that has a high probability of becoming obsolete is too risky.

4) Water Issue – Solar Thermal Plants use lots of Water which is Major Problem in Desert Areas. Using non-water cooling raises the cost of CSP projects too much. While using Sea Water has been proposed it remains to be seen if it possible to implement this solution as this would imply building Plants very near the Coastline

5) Energy Dependence – Currently Europe finds itself hostage to periodic Russian Gas Stoppages as it depends massively on imports of Oil and Gas. However this Project will replace one form of Energy Dependence to another. Note using distributed PV note only cuts down on Transmission costs,it entirely eliminates the Energy Security Issue.

6) Ecological and Cultural Issues – The Usage of Massive Arrays of Mirrors is noted to heavily impact the Desert  Wildlife endangering the endangered species. California has already seen a massive fight on this issue with Project Developers curtailing the size of their Plants and spending money to move the wildlife. Don’t think this would receive too much attention in the African countries. They are also cultural issues with some of these Muslim countries might have in Exporting so much Energy to Christian Countries.

7) Terrorist Attacks and Rogue Regimes – The Transmission Lines become a prime Terrorist Target which would increase the cost of the Project as Multiple Lines are constructed. There is also the danger that a rogue regime takes control of the North African countries. This would create a situation akin to War over the  Suez Canal by Britain with Egypt.Any sort of Multilateral would impinge on the Sovereignty of the countries creating another problem.

8 ) White Elephant being Built to be Juiced by Companies – Their are  allegations that Desertec is nothing but a monstrous White Elephant being built by the Companies to juice European Taxpayers of Hundred of Billions of Euros. Note this Project cannot be constructed without Massive Subsides by European Countries which would have to be paid over the next 2-3 decades. It would lead to Billion Dollar Contracts for the Involved Companies and More Billions in Profits over the Lifetime of the Project.


Spain delayed signing onto a pact that would have cleared the way to build the first 600 million- euro ($768 million) solar plant in a network of generators envisioned to stretch across the Sahara desert. The memo of understanding Spain hasn’t agreed to would have allowed Desertec Industrial Initiative GmbH to move forward with a 150-megawatt plant in southern Morocco to be built with the Moroccan Agency for Solar Energy. The whole project, which may total as much as 400 billion euros in investments by 2050 should all that’s planned come to fruition, would help satisfy North Africa’s energy demands amid a growing population and provide cash for economic development, according to the Desertec initiative.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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