Two weeks ago, a group of 20 German companies announced they would be forming a consortium called ‘Desertec’ for an investment in solar thermal power plants in northern Africa that would provide 15 percent of Europe’s electricity needs. The companies include re-insurer Münchener Rück, technology company Siemens, as well as utilities EON and RWE. It would require an investment of 400 billion € in the next decade.
It’s a grand vision but not one without critics. Among the most prominent is Hermann Scheer, a solar energy pioneer in the Social Democratic Party (SPD). He argues that for two reasons, focusing on projects like Desertec, which require large subsidies and long time scales for realization, is not the most effective way of building up renewable energy supplies. One is the difficulty in realising a project on this scale, involving EU as well as north African countries and difficult geographical conditions would be liable to huge time and cost overruns. The second is the speed at which decentralised solar is becoming cost competitive. Scheer estimates that solar electricity will have reached cost-parity with traditional fossil and nuclear plants in the next three years and that technologies such as electric cars will solve storage problems for intermittent electricity output from solar and wind.
And indeed, a quieter ‘revolution’ may already be happening in Germany. Driven by cheap roof-top solar modules from China and Taiwan (per kW, prices have dropped nearly 30 percent over a year) and generous public subsidies, even in cloudy Germany solar power has become a paying proposition for small-scale investors. While only providing half a percent of German electricity production today, growth rates in solar deployment are high. While in 2008, 1,500 MW of new capacity was installed, this year it is likely to hit 2,000 MW, according to industry estimates.
Both Greenpeace, and the Desertec foundation argue that it is wrong to frame the argument as one between large-scale and small-scale solar energy production. Greenpeace argues that in order to hit state climate change targets it is necessary to both increase German domestic production through Germany’s renewable energy law and invest in visionary projects such as Desertec. Scheer’s argument implies a choice in which decentralised solar production will be marginalised while the long time-scale of Desertec would provide a convenient political excuse to invest in a new generation of coal or nuclear power plants. Which of these arguments is proven right will have to be seen. German citizens’ willingness to pay higher subsidies linked to a growth in domestic solar capacity AND new subsidies that would likely be necessary to finance Desertec might deteriorate in the harsher economic climate. And federal elections in September will prove decisive for crucial political decisions in energy policy, namely those on whether to delay de-commissioning of nuclear power plants and the ban on building new ones; the regulation of new coal-fired plants with regards to CCS-requirements; and the level of future funding for renewable energy sources in the renewable energy law.