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Advanced CSP Teaching Materials

Chapter 16

Social and Strategic Aspects

Authors Matthias Günther1 Niklas Alsen1

Reviewers Klaus Hennecke2 Louy Qoaider3 Oum Kolthoum Bouhelal4

1 Institute for Electrical Engineering, Rational Energy Conversion, University of Kassel, Wilhelmshöher

Allee 73, 34121 Kassel 2 German Aerospace Center (DLR) -Solar Research, Linder Höhe 51147 Cologne, Germany

3 German Aerospace Center (DLR), Plataforma Solar de Almería (PSA), Ctra. de Senés s/n,

04200 Tabernas, Spain 4 Ecole Nationale de l’Industrie Minerale, Avenue Hadj Ahmed Cherkaoui, BP 753, Agdal, Rabat,

Maroc

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Table of Contents

Summary ................................................................................................................................4

Key questions .........................................................................................................................4

1 Scarcity of resources .......................................................................................................5

1.1 Fossil fuels ..................................................................................................................5

1.2 Water ........................................................................................................................14

2 Climate change .............................................................................................................25

2.1 Natural and anthropogenic climate change ...............................................................25

2.2 Social impacts of climate change ..............................................................................27

2.3 The Role of CSP .......................................................................................................30

3 Job market ....................................................................................................................32

4 Stable relations in EU-MENA.........................................................................................34

5 Initiatives for the large-scale development of CSP in the MENA region .........................38

5.1 Conceptual initiative: Desertec Foundation ...............................................................38

5.2 Educational initiatives ...............................................................................................39

5.3 Mediterranean Solar Plan .........................................................................................39

5.4 Industrial Initiatives ...................................................................................................41

Reference list .......................................................................................................................43

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Nomenclature

Acronyms

BMU German Federal Ministry for the Environment, Nature

Conservation and Nuclear Safety

BMWi German Federal Ministry of Economics and Technology

CSP Concentrating Solar Power

EU-MENA European Union and MENA GDP Gross domestic product

HDI Human Development Index

IEA International Energy Agency

IPCC International Panel of Climate Change MENA Middle East and North Africa

NPV Net present value

PV Photovoltaics RE Renewable energy

TREC Trans-Mediterrranean Renewable Energy Cooperation

UN United Nations UNEP United Nations Environment Programme

UNESCO United Nations Educational, Scientific and Cultural

Organization

WMO World Meteorological Organization

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Summary

Large projects like the Desertec project, even if they are first of all economic projects, have important

social implications. In this chapter we will have a glimpse on the social and strategic aspects of a new

solar-based energy partnership between Europe and the MENA countries could have. Some of them

are quite general and have to do with the future scarcity of certain resources or with the fight against

climate change. Others are more specific and have to do, for instance, with the international stability in

the EU-MENA region.

Key questions

• Which important social implications can have the development of CSP in MENA?

• What can be the role of CSP to prevent future energy and water supply problems?

• How can CSP contribute to limit the ongoing climate change process and its negative social

consequences?

• How many jobs could be created through a large-scale development of CSP in MENA?

• How a new intercontinental energy partnership can have stabilizing effects on the international

relations in EU-MENA?

• What are the main initiatives to promote the CSP development in MENA?

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1 Scarcity of resources

Any society depends on certain natural resources. During history, kind and quantity of the required

resources changed according to population growth and according to technological changes. In general,

the demand of natural resources has grown considerably during the history because the societies have

grown considerably and technological changes in many cases also caused a higher demand of natural

resources. The higher demand leads to a higher dependency and, consequently, to a higher

vulnerability of our societies to shortages of certain resources. Two important examples of these

resources are fossil fuels and water. In the following we shall see how CSP can help to reduce the

vulnerability of societies to fossil fuel and water shortages.

1.1 Fossil fuels

The energy dependency of modern societies is obvious, and it is also evident that welfare depends on

the access to sufficient energy sources. Increased material welfare needs higher energy consumption

because the production of more material goods needs more energy. The traditional craftsman who

works for few persons in his village needs less energy than a large factory that supplies thousands of

persons. A person who moves around walking or by bicycle needs less energy than a person who uses

a car every day and travels twice a year by air plane to his vacation site. The following table shows the

levels of energy consumption from the pure human metabolism that maintains human beings alive

until the consumption of a person living in a modern industrialized society.

Table 1: Energy consumption per capita to maintain simple human metabolism and in in different

social-ecological regimes

Metabolic profiles of social-ecological regimes Yearly consumption per capita [GJ]

Human Metabolism

Intake of Biomass via Food 3.5

Hunters and gatherers

Uncontrolled use of solar energy 10 -20

Agrarian societies

Controlled use of solar energy 40 - 70

Industrial societies

Fossil fuel consumption 150 - 400

Our societies have experienced an enormous productivity rise over the last centuries. This increase of

productivity has improved the material welfare considerably. Additionally, mechanisation has reduced

the corporal work and motorization has allowed widening our life experiences. One impressive result

of these developments is the fact that people nowadays live longer, that many of them have visited far

countries and that people today are healthier and more active at a high age. The following figure

illustrates the relation between energy consumption and Human Development Index (HDI), which was

established to quantify the quality of human life. It is to be seen that to an energy consumption of

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around 150 GJ per capita there is quite a strong positive correlation of energy consumption and HDI.

Above this value, however, there is no significant correlation.

Figure 1: Relation between energy consumption and Human Development Index as a measure of human life quality

The increment in energy consumption and the related improvements in human living conditions were

realized with a large-scale usage of fossil fuels as the main energy source. Fossil fuels drive our

machines, produce our electricity and move our cars and our planes. Fossil energy carriers drive our

economies. They were quite cheap to get, they have a high energy density and they can be converted

into high quality fuels that are appropriate for internal combustion engines. Our societies, as we know

them nowadays, our economic success and the reached social welfare depend on the usage of fossil

fuels. And: Our societies are in danger if fossil fuels someday won’t be available as they were

available over a long time and as they are still available, respectively if they become much more

expensive than nowadays.

The following figures illustrate the general dependence of the energy sector on fossil fuels. The first

one depicts the development of the total composition of the primary energy carriers worldwide. The

second and the third illustration show the dependence of the electricity sector on fossil and nuclear

energy carriers.

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Figure 2: The composition of the world primary energy supply shows clearly the large dependence of the energy sector on fossil fuels (source: IEA)

Figure 3: Development of the primary energy supply for electricity generation (source: IEA)

Figure 4: Primary energy supply for electricity generation in 2008 (source: IEA)

Now, as fossil fuels are fossil fuels, i.e. as they have been formed over a very long time (long in

relation to the human lifetime and to time spans that can be handled by human planning) and as they

need such long time spans to be formed, they are not renewable at a human time scale. They are

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exhaustible energy storages and not reliable long-term energy sources. That means that the depletion

of fossil fuels is possible and that this happens if they are exploited excessively. But, as the welfare of

our modern societies depends so much on the availability of energy sources and as fossil fuels are the

main energy sources, a depletion of fossil fuels threatens directly the welfare of our societies.

It is known that it is impossible to say at which moment a certain kind of fossil fuels will be finished

for commercial use. It is impossible because we do not know the exact amount of the remaining

resources and reserves5, we do not know the development of the consumption patterns and we do not

know future price developments. However, we know that the availability of the most important fossil

energy carriers we use, oil, natural gas and coal, will be reduced considerably in quite a near future

(near at a human life time scale) if the current consumption patterns will continue. Additionally, we

know that the reserves of oil, which is the most valuable energy carrier for many applications among

the mentioned fossil energy carriers, will be finished first if the consumption intensity does not

change.

A complete depletion of fossil fuels may be quite hypothetic, at least quite far away still. But, an

alarming fact is that it is not the moment of depletion that is a big problem for the continuity of our

welfare but a moment (or a time span) that comes much before: the peaking and the subsequent

decline of the exploitation of fossil fuels, in particular of the especially valuable crude oil.

So we will have a look at the “peak theory” of the exploitation of fossil fuels. According to this theory,

the exploitation of a fossil energy carrier has a peak, i.e. it grows to a maximum and falls after the

maximum to lower levels. Sometimes the development of the exploitation is idealized in the form of

the so-called Hubbert curve.6

Figure 5: Prototypical Hubbert curve

We should not expect the reality to follow exactly such an idealized curve. However, the core idea of

the peak theory does not depend on that. The central idea is that the exploitation of a non-renewable

resource starts at a certain moment, grows at a rate, which up to a certain moment grows itself and

after that moment diminishes. The growth of the exploitation gets to a maximum and starts to fall after

that until it finishes. The shape of the curve may be less regular and less symmetrical than in the ideal

version, but there will be a life cycle of the exploitation and technical utilization of a non-renewable

resource, which is characterized by the finding of its technical utilization (for instance, the invention of

internal combustion engines), the market introduction of the respective technology, the market growth

combined with a growing exploitation of the resource and the subsequent market reduction until the

disappearance of the technical utilization of the resource. The growing usage of the resource motivates

the exploration of new deposits and their subsequent exploitation. The discovery of new deposits

5 Generally, “resources” are the existing deposits of a certain type of energy carriers and “reserves”

are the part of the resources that are appropriate for commercial exploitation. 6 M. King Hubbert was a geophysicist who worked at the Shell Oil Company laboratories. He pre-

sented his peak theory in 1956.

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follows itself a peaking curve as well as the exploitation of each deposit (because each deposit is finite

as well as the number of deposits is finite), so that a large peaking curve of the total exploitation of the

resource results from the superposition of these different peaking processes.

Figure 6: Total resource exploitation as superposition of the exploitation of different deposits (source: Energy Watch Group, Oil Report 2007)

The resources, from which our fossil fuels are produced, are far from being totally depleted, but there

is some evidence that the peak of their exploitation is very near or has even already been passed. In

relation to crude oil, there are some findings of the UK Energy Research Centre in relation to the

exploitation dynamics illustrated in the preceding figure hat indicate that the peak of crude oil

exploitation is near7:

25 of the around 70,000 thousand oil fields in the world account for approximately one quarter

of the global production of crude oil. 100 fields account for half of the global production.

Most of these large fields are relatively old and few new ones are expected to be found.

The average rate of decline from all currently producing fields is at least 4 percent per year.

This implies that approximately 3 million barrels per day of new capacity must be added each

year, simply to maintain production at current levels. That means that each three years a new

capacity equal to the total Saudi Arabian exploitation capacity would have to be found.

The study holds that a peak of conventional oil production before 2030 appears likely and that there is

a significant risk of a peak before 2020.

Additionally, if we consider fossil resource exploitation rates at national levels, then we can see that in

many cases and for many resources the peak has already been crossed. In Germany, for instance, the

exploitation not only of coal and crude oil, but also of lignite has already crossed their peaks. The

following figure shows the exploitation of crude oil in different countries and indicates the year when

the maximum of the national exploitation was reached.

7 See Sorrel et al. 2009 pp. V – X.

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Figure 7: Peak of crude oil exploitation in different countries (source: www.gasprices-usa.com)

Why is, or may be, the peaking of the global oil production a major problem? All depends on what

triggers the peaking. Is it a falling demand that causes that the oil production does not go on growing?

Or is it the offer that cannot go on growing? A major problem arises if the latter is the case. If the

peaking is triggered by a decreasing offer at a constant or a growing demand, then oil will be scarcer

and scarcer and its price will grow considerably. The continuous or growing demand, hence, is

confronted with higher prices. Indeed, as we have seen above, the peaking in the case of the oil

exploitation is caused by the finiteness and the resulting scarceness of the resource, not by a lower

demand at constant offers. The fact that high demands of scarce goods cause high prices is a general

economic fact and in many cases it is not a major problem (for instance higher house prices in city

centres). However, in the case of oil, scarcity and rising prices are a major problem: With a share of

41.6% of the global final energy consumption, oil is the energy source with the highest share in the

world.8 Additionally, it is especially valuable because of its liquid form and its high energy density.

Oil is much more difficult to substitute in some forms of its utilization (as air plane fuel, for instance)

than some other energy carriers. The functioning of modern societies depends to a large extent on the

availability of affordable oil. Scarcity and rising prices of crude oil would not only affect particular

economic processes but modern social and economic life in general. The actual dependency of the

energy sector on fossil fuels in general and on oil in particular and the centrality of the energy sector

for the welfare of our societies implicate that an offer-triggered exploitation decline is a threat for the

general welfare of our societies. It is not only gasoline that would be unaffordable for many people,

but also food and other basic goods would become more expensive. This is not only an economic risk,

but a general social one.

We said that we should not expect the reality to follow an ideal Hubbert curve. Indeed, the latter is

very improbable. In the case of crude oil there are very different kinds of oil fields. Some of them are

more accessible than others (some are closer to the surface, others are deeper; some are onshore,

8 See IEA 2010, p. 28.

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others are offshore), in some fields the oil is easy to exploit with “simple” drillings, in others it has to

be extracted with much more efforts (for instance from oil sand or oil shale). The general tendency is

that more and more easily accessible oil deposits are depleted and that more and more deposits have to

be tapped that are more difficult to exploit. This goes along with higher prices. Only higher prices

allow the tapping of deposits the exploitation of which is more complicated and more expensive. But,

as the easily exploitable deposits are more and more depleted, the more costly exploitation of more

demanding deposits becomes more and more important and maintains the prices high. So, it is not only

the peaking of the total oil exploitation that will cause higher prices, but also the gradual shifting of

the exploitation activities from easily exploitable oil deposits to less easily exploitable oil deposits,

which will be accompanied by higher oil prices.

Indeed, a considerable growth of the oil price could be observed during the last years. Supposing that

long lasting market tendencies are the effect of fundamental market mechanisms, it can be supposed

that this tendency has to do with respective changes of demand and offer levels and with higher oil

exploitation costs. The following figure illustrates the general tendency over the last ten years.

Figure 8: Crude oil cost development in Europe (source: IEA 2010a)

There may be doubts about what exactly caused the high price peak in 2008. But, whatever may have

been the causes, the tendency of growing crude oil prices can be recognized at a larger time scale. In

the second half of 2008 and at the beginning of 2009 there was a sharp price drop due to the financial

crisis in the USA and in some other countries and the subsequent global economic recession. The

demand decreased during the recession and permitted lower energy and energy resource prices.

However, after the crisis the tendency to higher prices was to be observed again. The price drop just

marked an interruption of the growth due to a temporal demand break and possibly also due to what

could be seen retrospectively as an overheating of the oil prices in 2008. In 2010 the prices reached

again values above the prices before the 2007/2008 peak.

There is of course a difference between oil exporting and oil importing countries concerning the

effects of rising oil prices and possible future price explosions. Oil importing countries will be affected

much more directly because they will have to pay a higher share of their domestic product for their

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energy supply and the capital they invest in energy will be missing for other purposes. But, high crude

oil prices will be a problem for oil exporting countries too. This is the case in a twofold way:

a) If the power sector of an oil exporting country itself depends strongly on oil, the opportunity costs

will be very high, because the oil that is used for the electricity sector cannot create the national

revenues it would create if it was exported. Additionally, the oil that is burned in power plants cannot

be used for products with higher added values (high quality fuels, petrochemistry).

b) In the long run, oil exporting countries will be affected by the subsequent market changes and

technological developments, which will be triggered by the higher fuel prices. Only at the beginning

the higher prices will be convenient for oil exporting countries because the oil demand is quite price-

inelastic in a short time frame. But in the long run high prices will have the effect that the currently

huge crude oil market, which generates considerable wealth in some exporting countries, will reduce

the importance that it has nowadays. High prices will motivate the development of alternative

technologies that allow the substitution of oil in many of its usages by other means. In some

applications, where the function of oil can be fulfilled by other means, it will be substituted if the

prices are sufficiently high (for instance e-mobility in individual mobility). In other applications,

where substitution is more difficult, its usage will be maintained much more time (e.g. air plane fuel).

The shifting from the exploitation of easily exploitable oil deposits to the exploitation of less easily

exploitable ones is inevitable. Moreover, the peaking of the oil production is also inevitable and will

happen quite soon (if it did not happen already) if the current exploitation rates are maintained. While

the first aspect leads to gradually increasing prices, the second one goes along with the danger of hard

price shocks. In order to reduce the social and economic risks of an offer-triggered peaking with an

associated price shock, the demand side has to be adapted to the falling offer. Anyway, growing prices

at the peak moment would cause a demand reduction. But, it would be a forced reduction accompanied

by difficult forced economic and social adaptation processes. The challenge is to find a smoother way

of a gradual demand reduction before the peak is reached.

Such a demand reduction can be reached in a twofold way: First, the energy demand itself can be

reduced, and, second, the demand of crude oil can be reduced through their increasing replacement by

other energy sources. Both strategies can be followed. And, indeed, in many countries growing efforts

are done to take both ways.

A concentration on the reduction of the energy demand alone would not permit to avoid serious risks

for the welfare of our modern societies. Efforts are to be done, on all accounts, to substitute crude oil

by other energy sources. What substitution possibilities are there?

There is, first, the possibility to substitute conventional crude oil9 by other fossil energy sources. Such

alternative fossil energy carriers are non-conventional oil resources on the one hand and other fossil

energy carriers on the other hand. However, respective substitution strategies imply certain

complications. First, non-conventional oil exploitation means high environmental costs at lower

production efficiencies. Second, more generally, the usage of any fossil fuel implicates environmental

costs (as we will see more in detail in the next section). Third, which is most important in the present

context, the usage of other fossil energy carriers instead of conventional crude oil postpones the

problem, but it does not really solve it: Although the reserves of some other fossil energy carriers last

longer than the crude oil reserves (at the current or possible higher future extraction rates), they are

finite at quite a short time frame.

There is also a certain price correlation of the different fossil energy carriers. As they can fulfil some

substitution function for each other, at least for some applications, the prices are not completely

independent. This could be observed quite clearly in the strong price increments in the years 2005 to

9 “Conventional oil” refers to oil produced or extracted with conventional technology. The opposite is

unconventional oil, which are basically extra heavy oil, oil sand and oil shale. They require the applica-tion of special technologies.

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2008. The prices for coal and natural gas showed a similar behavior like the oil pieces. The following

figure illustrates this. It shows the development of the import prices in the years 1991 to 2009 in

relation to the prices of 1991 for the mentioned energy carriers in Germany.

Figure 9: Development of oil, natural gas and coal import prices in Germany between 1991 and 2009 (source: German Federal Ministry of Economy and Technology 2010)

A second substitution strategy is the substitution of oil by nuclear power in the electricity sector.

However, environmental problems (especially the nuclear waste problem) and security problems have

provoked that nuclear power in several countries is not any more considered as an option for a future

electricity generation system. The recent Fukushima catastrophe showed once more the enormous

risks of the nuclear technology. Additionally, it also depends on finite resources. Nuclear fusion

technology, on the other hand, is still in development and will need much more time to mature. It

would also be a very cost intensive technology whose economic perspectives are not yet clear.

Finally, a substitution of oil can be achieved by renewable energy sources. The respective technologies

are well proven and do not have the problem of possible future price shocks. Quite to the contrary,

some renewable energy technologies are expected to become cheaper in the future. Hydropower and

now also wind energy are already competitive with combustion based electricity generation. Other

technologies, as for instance CSP, will become more competitive once learning effects and economies

of scale will reduce the specific investment costs. Indeed, the development of the usage of renewable

energy sources seems to be the only reliable, secure and cost effective substitution strategy we have.

The realization of such a substitution strategy needs time and should be initiated well in advance of the

peak in order to avoid abrupt price shocks. It has also to be taken into consideration that the peak itself

cannot be announced in advance. There is quite a consensus that an exploitation peaking can be

recognized only retrospectively. But, a socio-economic reaction after the peaking would be too late to

achieve a smooth adaptation to the new situation. Additionally, prices may rise already before the peak

is reached if the demand grows rapidly. There is a correlation of peaking and price increments, but

they may occur with a certain time shift.

So, a solution to the threatening economic and social crisis at the moment when the peak will be

crossed, i.e. at the moment when the offer of fossil fuels gets reduced, is an accompanying or better

preceding change in the demand side that is not only reached by a lower energy consumption, but also

and much more by the change of our electricity market from a fossil-fuel-based one to a RE-based

one. This will reduce the dependency from oil and other fossil fuels and it will mitigate the negative

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effects of the scarcity of fossil fuels. There are already innumerable efforts to reach such a reduction.

And one of the most appropriate measures to reach such a change is the development of a solar-based

electricity market where it is possible. The change will need a high investment, but it will be a rentable

investment because it will allow to accompany the peaking of the oil exploitation by a reduction of the

oil demand, which is, as we saw, the only possibility to avoid or at least to mitigate the possible

negative economic and social effects of this event. The initial investment in CSP plants and in new

transmission lines and the currently still higher prices for the electricity generated in CSP plants will

be compensated by the smooth changing process to a new RE-based energy system and by the

avoidance of a sharp economic and social shock because of post-peak energy price explosions. It is

important to start as early as possible to develop alternative energy technologies in order to have the

means at hand when important fossil fuels become scarcer.

1.2 Water

While the energy dependency of modern societies is quite obvious, the water dependency not only of

our modern societies, but of whatever kind of human society is even more evident. The usage of fossil

fuels makes possible the characteristic way of life in modern societies, but water is necessary for life

itself. Oil scarcity endangers social welfare; water scarcity endangers life itself. Fossil fuel scarcity

may cause a social crisis; water scarcity may cause wars.10

Additionally, crude oil scarcity can be

fought by oil substitution; water scarcity cannot be fought with any substitute.

A secure water supply, thus, is absolutely essential for the human existence. Water scarcity converts

itself not only into a social welfare problem, but also in a health problem, security problem and,

finally, in an existential problem.

One of the regions, which are most threatened by water scarcity, is the Mediterranean area, especially

MENA. In most parts, precipitation is very low, and there are only very limited freshwater resources.

Water stress for a country or a region is defined as the water availability of less than 1700 m3/person/y.

Water scarcity for a region or a country is defined as the water availability of less than 1000

m3/person/y. The following figure shows the regions with water stress (yellow) and with water scarcity

(red) in the year 2000. The MENA region is to be seen as one of the most affected regions in the

world.

10

The former UN general secretary Boutros Boutros-Ghali, for instance, said already in 1990 that there could be wars for water. See http://www.bpb.de/die_bpb/1HXEGQ,2,0,Klimawandel_%96_eine_weltweite_Gef%E4hrdung.html

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Figure 10: Water availability in 2000 (source: University of Kassel)

The following figure shows that only very few countries in the MENA region do not suffer from water

scarcity (these countries are Iraq, Iran, Syria and Lebanon).

Figure 11: Total freshwater sources per capita in the MENA region for the year 2000 (source: Trieb 2007, p. 56)

Water scarcity is determined in relation to the ratio of available water to the existing population

(m3/person/y). If the population grows, then water scarcity will grow too. The MENA region is one of

the regions in the world with the highest population growth. In the past decade the average annual

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growth rate was at 2.1%. The following figure shows the population growth according to the UN

medium growth scenario. According to this scenario, the population in 2050 will be doubled in

relation to the population in 2000.

Figure 12: Population growth in MENA according to the UN medium growth scenario (source: Trieb 2007, 72)

The population growth will increase the water demand. Today, agriculture is responsible for 85% of

the freshwater consumption in the MENA countries. These countries will be keen to intensify even

more their agriculture in order to maintain low their food dependency on other countries. Additionally,

it is expected that the industrial sector will gain importance and hence also increase the water demand.

A rising living standard may also contribute to a higher water demand. To a certain extend these

effects can be mitigated by a higher water use efficiency (efficient irrigation systems, wastewater use

etc.). DLR developed the freshwater demand scenario that is illustrated in the following figure.

According to this scenario, which includes efficiency measures, the freshwater demand grows from

about 270 billion m3/y in the year 2000 to about 470 billion m

3/y in the year 2050, which is a growth

of 74% in relation to the demand in 2000.

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Figure 13: Freshwater demand derived from growth of population and economy considering increasing use of wastewater and efficiency as described in the text (source: Trieb 2007, 78)

Additionally, precipitation and water runoff may decrease in the future because of climate change,

which would aggravate even more the water scarcity. Atmospheric models have shown that a

continuing climate change will lead to a decrease of the precipitations and of the available water in the

MENA region and also on the northern shore of the Mediterranean. The following figure shows the

modeled changes in the available water resources in the last decade of the 21st century in relation to

the available water resources in the penultimate decade of the 20th century in accordance with a given

scenario developed by the IPCC. With other scenarios the modeling leads to slightly different results,

but it always shows a reduction of the water availability in the MENA region and in the

Mediterranean.

Water scarcity will most probably increase, thus, from the demand side as well as from the availability

side.

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Figure 14: Projected runoff (available water) for the period 2090-2099 compared to 1980-1989 in a scenario of a world with rapid economic growth, a global population that peaks in mid-century and rapid introduction of new and more efficient technologies with a balance of fossil and non-fossil energy resources. (source: IPCC 2007, p. 49)

The water scarcity in the MENA region implies that there is a considerable freshwater deficit. It

amounts currently to about 50 billion cubic meters per year. This deficit is covered mainly by the use

of fossil groundwater, i.e. by the tapping of non-renewable water storages. In the MENA region, this

water was deposited tens of thousands of years ago, when there was still more abundant rainfall in the

region.11

“Fossil groundwater” in general refers to aquifers with large stocking capacity, the rate of

recharge of which is negligible in relation to the rate of discharge if they are tapped for human

consumption.

The main aquifer systems of the MENA region are the Nubian Sandstone Aquifer System in Egypt and

Libya, the North Western Sahara Aquifer in Algeria, Libya and Tunisia, various aquifers on the

Arabian Peninsula and the Qa Disi Aquifer in Jordan. Among these, the Nubian Sandstone Aquifer in

Egypt and Libya is the largest. It has a static duration of 2271 years, i.e. under the current rate of

withdrawal the accessible reserves would suffice more than 2000 years. However, although until the

year 2000 only 0.4% of the total resource (about 40 billion cubic meters) had been extracted from the

aquifer, the effect on the groundwater level and on the existing wells are considerable if not disastrous:

The groundwater level has fallen by 60 meters since 1960 and 97% of the existing natural shallow

wells have fallen dry.12

Obviously, the usage of the non-renewable fossil groundwater is not only

unsustainable because of its finiteness but also highly problematic because of its environmental

consequences.

The following table shows the reserves in the large fossil aquifers and its static duration.

11

See Trieb 2007, pp. 4-5, 55-58. 12

See Foster et al. 2006, p. 78.

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Table 2: Main aquifer systems containing fossil water in the MENA region (Foster et al. 2006, p. 18)

However, as the water demand will grow, the extraction rate would have to be increased if no other

fresh water resources were made available. Supposing the doubling of the MENA population by the

year 2050 and a business-as-usual scenario, the aquifers of the Arabian Peninsula would have

completely depleted to a theoretical 128% and the Jordan Qa Disi Aquifer even to 496%. (The

numbers above one hundred percent mean, of course, that the freshwater resources would have been

completely depleted before 2050.) The Nubian Sandstone Aquifer and the North Western Sahara

Aquifer would be depleted by 24 respectively by 27 percent. However, the environmental damages we

mentioned above for the Nubian Sandstone Aquifer would be even more immense than they are

already now and additionally the water would have to be pumped from great depths of around 1000

meters.

There may be measures to increase the efficiency of water distribution and consumption. But, even

with these measures the freshwater deficit by 2050 would be at about 150 billion cubic meters per

year, while it would amount to more than 200 billion cubic meters per year if no such measures were

taken.13

The freshwater demand and the growing deficit is illustrated in the following figure. The

supposed increase of sustainable water use is due to enhanced re-use of water and to some resources

that remained untapped up to now.

13

See Trieb 2007, pp. 2-7, 131-135.

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Figure 15: Industrial, municipal and agricultural freshwater demand in MENA in comparison to sustainable used freshwater resources of the region (white line). (source: Trieb 2007)

The growing gap between the freshwater demand and the sustainable water use and the fact that many

non-renewable sources are finite in quite short time frame show that many MENA countries would

face a serious water crisis in quite a near future if they continued to rely on the available fossil water

besides their scarce renewable freshwater resources. Other sources have to be developed to supply the

growing population with water. If this is not achieved, the growing water scarcity will lead to grave

distribution conflicts about the existing water. Migration and land conflicts could arise. There are

already water conflicts in the wider MENA region, more exactly, in Darfur/Sudan: Drought and

desertification in the northern parts of Darfur have led to the migration of Arab nomads to the south of

Darfur, where they came into contact with local farmers, which resulted in grave disputes over land

and water resources.14

Seawater desalination has a big potential to contribute to a solution of the water scarcity problem.

Concentrating solar power can play an important role in seawater desalination and may be, therefore,

not only a key to the solution of energy problems but also (and maybe in some areas even more

urgently) the key for the solution of the water supply problem.

Seawater desalination is an energy intensive process. To add more fossil-fuel-based desalination plants

would result in higher consumption of fossil fuel, which would have negative effects on the fossil fuel

reserves and intensify greenhouse gas emissions. Additionally, it would imply higher future cost risks,

and for countries without or with low own fossil reserves it would imply a higher dependency on fossil

fuel exporting countries. To make the water supply dependent on limited, fossil energy resources with

unknown cost perspectives would be very risky, while the foundation of a part of the water supply on

renewable energy resources, which even should become cheaper with time, would be rather

reasonable. Solar water desalination is, hence, an interesting option to secure the future water supply.

It is nearly free of emissions, it uses a domestic resource of the MENA countries, i.e. solar radiation,

and it has the potential to produce sufficient water for the growing demand. The technology is

available and can be used to produce large amounts of desalted water.

14

See Raouf 2009, p. 1.

21

It is also cost effective. The costs of heat from concentrating solar collector fields is at present

equivalent to heat from fuel oil at about 50 US$/barrel. In the long term 15 US$/barrel will be

achievable for solar field generated heat, while fossil fuel is expected to get more expensive in the

future. CSP-based desalination would be then the least-cost option.

Thus, CSP powered seawater desalination is neither limited by the solar radiation resource nor by

costs. Supposing a suitable political background and a consequent market introduction, the limiting

factor would only be the industrial capacity expansion. Under these conditions the over-use of

groundwater could be stopped through the use of CSP-based seawater desalination by 2035. In

combination with electricity production, water desalination can be especially cost effective. Costs

were calculated to be below 0.4 €/m³ in two decades.

Figure 16: Water costs from CSP plants with MED desalination for different interest rates assuming that the electricity produced by the plants will achieve a fixed revenue of 0.05€/kWh. With an interest rate of 5 % a water cost of 0.34€/m

3 can be achieved. (source: Trieb 2007)

A possible transition scenario from the actual use of fossil water to a sustainable water supply is

shown in the following figure. The growing water demand is met by efficiency improvements, by

wastewater reuse and especially by seawater desalination. Around 2030 the unsustainable fossil water

use will be finished. Concerning the seawater desalination, it is to be expected that until 2020-2025

quite a big share will be based on fossil fuels. But after 2025 the solar-based seawater desalination will

dominate.

22

Figure 17: Water demand scenario for MENA until 2050 and coverage of this demand (source: Trieb 2007)

A place where it is especially urgent to develop large seawater desalination capacities is Sana’a, the

capital of Yemen. Sana’a is situated in the north-west part of the country at an elevation of 2,400

meters above sea level in an arid basin. In 2004, Sana’a had a population of 1.75 million people, while

Yemen had a total population of 20 million people. The population growth rate was at 5.5% (2004

national census).

Figure 18: View on the City of Sana'a (source: Trieb 2007)

The water supply of the city and its surroundings is mainly based on ground water reserves and on rain

water. The ground water comes from a water basin which has a surface area of 3,250 km². The present

water situation of Sana’a shows that the total ground fossil water reserve is at best in the region of 2 -

3 Billion m³. With an extraction at 260 Million m³ per year and a ground recharge rate at about 52

Million m³ per year (the average annual rainfall is 200 – 400 mm) it has been estimated that the Sana’a

Basin ground water will be depleted between the years 2015 and 2020 (estimates of the Sana’a Water

23

and Sanitation Local Corporation). In the absence of regulations some 13,000 water wells have been

constructed for urban and rural water supply and to irrigate some 23,000 ha agricultural land. As a

consequence, groundwater levels are falling by 3-5 metres per year as a result of the imbalance

between groundwater extraction and recharge.

According to a preliminary analysis, different measures, like the transport of fresh water from other

sources, reduction or elimination of agricultural activities and better water management, were

considered, but immediately rejected because of being insufficient or not realizable.15

The only viable

option is seawater desalination. For that there are two different possibilities: first, the seawater

desalination is done at the coast and the desalinated seawater is pumped to Sana’a, and, second, the

large majority of the Sana’a population is relocated in coastal areas where the seawater desalination is

realized.

In both cases, desalination plants with a cost of 4 billion US$ would have to be installed at the sea

shore to supply additional water for 2 million people. However, the remaining costs for the two

options differ considerably. While the construction of a pipeline with a capacity of around 1 billion

m3/y costs about 3 billion US$ and the construction of additional solar power plants for pumping the

water up to Sana’a costs other 3 billion US$, the costs of a resettlement of the population of Sana’a

would cost at least 35 billion US$. Apart from being very expensive, the relocation option would be

difficult to implement and its social and cultural costs would be high.

That’s why a large water supply project is proposed by the authors of the study that would supply 1.0

billion m³ per year of water treated by solar desalination from the Red Sea by 2020. Water would be

desalted near the coastal city of Al-Hudaydah (Hodeida) and pumped from there to the capital.

Possible pipeline routes for desalted water are shown in the following figure.

Figure 19: Possible routes for a water pipeline to the city of Sana'a with the maximum height and the length of each route (Trieb 2007)

Under reasonable suppositions, water costs would be lower with solar-based desalination than with

fossil-fuel-based desalination.

Until the end of 2010 no pilot plant for solar powered seawater desalination has been constructed yet.

However, first experiences with fossil fuel based seawater desalination plants are being made in

15

The seawater desalination project of Sana’a is described in the appendix of the AQUA-CSP study (Trieb 2007, pp. A8 - A12) where it was edited by Towfik Sufian, University of Sana’a and Hussein Altowaie, University of Aden, Yemen. The full project proposal can be downloaded under: http://www.desertec.org/downloads/proposal_sanaa.pdf

24

different places in Yemen.16

In addition, it is planned to build a water pipeline from the coastal Al-

Makha to Taiz, a city suffering even more pressingly under water scarcity. The pipeline is planned

with a capacity of 150,000 m³ per day and will be funded by Saudi Arabia.17

As experiences with

seawater desalination and water pipeline infrastructure are already being made, hindrances for the

market entry of solar powered seawater desalination will be lower. Due to the presumably low costs of

CSP powered seawater desalination and to the expected depletion of the Yemen natural oil and gas

reserves within the next decades, for Yemen and other countries this market entry seems to be a

favourable solution both from the social and economic perspective.

16

See Al-Ariqi 2010. 17

See Assamiee 2010.

25

2 Climate change

The second topic considered in this chapter is the role of CSP in the fight against the threat of climate

change.

2.1 Natural and anthropogenic climate change

The Earth always faced climate change processes, i.e. changes “in the state of the climate that can be

identified (e.g. using statistical tests) by changes in the mean and/or the variability of its properties,

and that persists for an extended period, typically decades or longer” (IPCC 2007, p. 30)18

. Species

living on the Earth always had to adapt to the consequent changing environmental conditions. Climate

change processes took and take place as a natural phenomenon (think for instance of the existing of ice

periods in the past), caused principally by the following factors: periodic changes in the Earth’s

movement (Milanković cycles), changes in the Sun activity, the continental drift, atmospheric changes

and volcanism and the impact of asteroids. Some of these processes are very slow and there is much

time for adaptation of the biosphere to changing climatic conditions. Short time variations due to

instable Sun activity, on the other hand, are weak and do not generate the necessity of adaptation.

Sudden climate effects of natural events that may have strong or even catastrophic consequences for

the living species are of a twofold origin: volcanic eruptions (for instance in the year 1816, the “year

without a summer”, due to the Mount Tambora eruption in 1815) and asteroid impacts (according to a

wide-spread theory a cause of the extinction of the dinosaurs).

Besides these climate variations that are caused by natural processes and that are independent from

human activities there is the relatively new phenomenon of the climate relevance of human activities.

There is an anthropogenic climate change or an anthropogenic component of current climate change

processes. The anthropogenic component of climate change is generated by the modification of the

composition of the atmosphere. This modification is the result of the output of greenhouse gases in

different human activities.

Greenhouse gases have the effect that they change the energy balance and radiation equilibrium at the

Earth surface. The energy balance at the Earth surface is characterized by the incoming solar radiation

as energy input and by the reflected radiation as well as the radiant emittance of the Earth surface itself

as the energy output. Because of the temperature of the Earth’s surface the emitted radiation is in the

infrared range. Greenhouse gases in the atmosphere have the characteristics that they reduce the

atmospheric transmission of the infrared radiation (but not of the visible light). Higher greenhouse

contents in the atmosphere, thus, have the effect that a larger part of the emitted infrared radiation

from the Earth’s surface is conserved in the Earth-atmosphere system. A new energy balance is

achieved at a higher temperature of the Earth surface. Higher greenhouse gas contents in the

atmosphere, hence, cause a global warming at the Earth surface, in the lower atmosphere and in the

water bodies.

The most important greenhouse gas in relation to the anthropogenic climate change is carbon dioxide

(CO2). Other important greenhouse gases (they have a higher greenhouse effect than carbon dioxide

(per Mol or per kilo), but are produced much less) are methane (CH4), nitrous oxide (N2O) and

halocarbons.

18

The Intergovernmental Panel on Climate Change (IPCC) is the leading international body for the assessment of climate change. It was established by the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) to provide the world with a clear scientific view on the current state of knowledge in climate change and its potential environmental and socio-economic impacts.

26

The following figure shows the increment of the greenhouse gases CO2, N2O and CH4 in the

atmosphere. The atmospheric concentration of these greenhouse gases has grown considerably since

pre-industrial times (since 1750).

Figure 20: Atmospheric concentrations of carbon dioxide, methane and nitrous oxide from the year 0 to 2005 (Foster et al. 2007, p. 135)

The high greenhouse gas emissions are an effect of the industrialization (especially of CO2),

intensification of agriculture (especially N2O and CH4) and land use changes, in particular

deforestation.

The climate change effect of the changing atmospheric composition together with other relevant

factors can be determined with climate models. The following figure shows a comparison of climate

change due to exclusively natural factors and due to a combination of natural and anthropogenic

factors. The comparison illustrates very clearly the relevance of the anthropogenic component of the

climate change drivers.

27

Figure 21: Global and continental temperature changes in comparison to climate models using only natural forcings or both natural and anthropogenic forcings (IPPC 2007, p. 40)

Additionally, the figure shows that the observed warming in the different continents and at the global

level coincide very well with the calculated values for the combined natural and anthropogenic climate

change. Over the last hundred years, the global ocean and air temperature rose by 0.74°C. In addition,

the trend accelerated in the last decades (IPCC 2007, p. 30).

2.2 Social impacts of climate change

The effects of the global warming are different in different parts of the world. Environmental

consequences are different and therefore also the social consequences will be different.

IPCC made projections about regional impacts of climate change that are based on different scenarios

of economic development and population growth, technological progress and other parameters.19

In

the IPCC report, all of these impact projections are rated as “very high confidence” or “high

confidence” statements. The magnitude and timing of the mentioned impacts will depend on many

parameters like, for example, future greenhouse gas emissions, regional development pathways and

adaptation strategies. For Africa, Middle East and Europe, the following results were found:

19

See IPCC 2007, p. 50.

28

- In Africa, by 2020, between 75 and 250 million people are projected to be exposed to

increased water stress due to climate change. In some countries, yields from rain-fed

agriculture could be reduced by up to 50%. Agricultural production, including access to food,

in many African countries is projected to be severely compromised. Towards the end of the

21st century, the sea level rise will affect coastal areas, which in many cases count with large

human settlements. An increase of 5 to 8% of arid and semi-arid land in Africa is projected.

- In the Middle East, by the 2050s, freshwater availability, particularly in large river basins, is

projected to decrease. This decrease will also lead to soil degradation and lower agricultural

production. Climate change is projected to intensify the pressures on natural resources and the

environment associated with rapid urbanization, industrialization and economic development.

- In Europe, climate change is expected to enlarge regional differences of the availability of

natural resources, in particular of water. Negative impacts will include increased risk of inland

flash floods and more frequent coastal flooding and increased erosion (due to storms and sea

level rise). Mountainous areas will face glacier retreat, reduced snow cover and species losses.

In southern Europe, higher temperatures and more droughts with reduced general freshwater

availability are probable. Reduced hydropower potential and crop productivity will be a

consequence.20

An increase of health risks due to heat waves is probable and the frequency of

wildfires will increase.

The nearest and most foreseeable problem caused by the ongoing climate change on both shores of the

Mediterranean Sea is a drop of the renewable water resources. General warming will cause in this

region more evapotranspiration, less snow, less rain (especially in summer), less surface runoff and

less groundwater resources, which will lead to a lower freshwater availability. Growing populations,

higher living standards and the reduction of fossil water availability in MENA will aggravate the water

supply situation.

The following figure shows expected runoff water variations from the 1980s to the 2090s.

20

In Milano 2010, pp. 1-5 it is stated that the northern Mediterranean catchment basins are likely to witness a 15-30% drop in surface runoff. It is during the summers that this decrease will be most dras-tic, with runoff falling by 30 to 40%. Runoff is the water flow that occurs when soil is infiltrated to full capacity and excess water from rain, melt water, or other sources flows over the land.

29

Figure 22: Projected runoff (water availability) for the period 2090-2099 compared to 1980-1989 in a scenario of a world with rapid economic growth, a global population that peaks in mid-century and rapid introduction of new and more efficient technologies with a balance of fossil and non-fossil energy resources. (IPCC 2007, p. 49)

Other problems are related to a higher natural hazard potential that is a consequence of global

warming and to increasing general human health problems.

There are studies that try to quantify the costs (and possible benefits) of global warming and of the

fight against further climate change. It is obvious that such an economic analysis is a very complex

problem and that it depends on a large number of assumptions about, for instance, climate change

scenarios, the effectiveness of certain climate protection measures, the costs of a far-reaching

restructuring of our economies, etc.

The general idea is to compare two scenarios: first, a scenario, in which no special measures are taken

to reduce future climate change, and, second, a scenario, in which high (and successful) efforts are

done to reduce future climate change.

Now, in both cases, costs and benefits have to be quantified, they have to be compared and a cost-

benefit-analysis has to be done. This can be done in the form of the determination of the Net Present

Value (NPV) for both cases. The Net Present Value is a sum of benefits (positive values) and costs

(negative values) of a certain project. This sum has to take into account not only current costs and

benefits, but also future costs and benefits. It has to be taken into consideration that future costs and

benefits have a lower value for a decision-maker than current costs and benefits of the same monetary

value (to earn 10 Euros now is more valuable than to earn 10 Euros in two years – even if there was no

monetary inflation). Therefore, a discount rate has to be determined that defines how future costs and

benefits are discounted in relation to their actual value. If all costs and benefits are known and if it is

known when they occur, then a NPV can be calculated. The two scenarios can be compared according

to their NPV and the scenario with the higher NPV should be selected in order to develop action

strategies. Generally, a positive NPV indicates that benefits outweigh costs; a negative NPV indicates

the opposite.

Both scenarios are likely to produce negative NPVs. Climate change will burden costs on societies

whether people take on mitigation measures or whether they simply do nothing; the key question is

which path will be less expensive.

30

- In the case of the Business-As-Usual scenario, where no particular action is taken to limit

climate change, no direct investment costs would be necessary. On the other hand, a more

intensive climate change would produce high costs in the future, for instance because of an

increased frequency of natural hazards and because of rapidly growing water scarcity. There

may be some economically positive effects of climate change. However, fundamental

environmental modifications like a changing climate are much more prone to have more

negative effects on the social-natural world, which is quite well-attuned under the current

climate conditions.21

- In the case of high efforts to limit climate change, high investments would be necessary to

transform whole national economies in low emission/low carbon economies. Future costs of

climate change, on the other hand, would be lower than in the business-as-usual scenario,

because there would be less natural hazards, more stable food production, less health

problems, less water scarcity, etc. Again, the Net Present Value would probably be negative,

because there would still be some negative impacts of climate change that would add to the

initial investment costs for the climate change mitigation measures.

A comparison from the economic point of view of the two scenarios at a global level was undertaken

in the Stern Review on the Economics of Climate Change that was conducted by Nicholas Stern on

behalf of the British Government.22

According to this study, the overall costs and risks of climate

change will be equivalent to losing at least 5% of global GDP. With a wider range of risks and impacts

taken into account, the estimates of damage could rise to 20% of GDP or more. In contrast, the costs

of action – reducing greenhouse gas emissions to avoid the worst impacts of climate change – are

estimated to be around 1% of global GDP23

each year (Stern 2007a, p. vi). In the report, Stern used a

low discount rate, arguing that “discounting at a heavy rate would be viewed by most people as

unethical. It involves discrimination between individuals by date of birth.” (Stern 2007b, p. 8)

Besides the difficulty to do an exact cost-benefit-analysis it is in particular the discount rate and the

time frame that have to be chosen carefully and that may be discussed very controversially.24

However, aside from different views about the right method of discounting and valuing the impacts of

climate change, there is a broad consensus that the negative economic effects of an ongoing climate

change will dominate.

2.3 The Role of CSP

The last section showed that the reduction of greenhouse gas emissions is a necessary measure not

only to protect out natural environment but also to prevent or at least reduce future social welfare

losses.

21

Richard Tol from the Economic and Social Research Institute, Dublin, concludes from a comparison of several studies that the economic effect of a doubling of the atmospheric concentration of green-house gas emissions may be positive only in a first stage, but negative in the medium and long term (Tol 2010, pp. 13-37). 22

Stern is Chair at the London School of Economics. 23

In June 2008 Stern raised the costs of mitigation of the worst impacts to 2% of the global GDP, as climate change happens faster than had been previously thought, so that emissions would need to be reduced even more sharply. (Jowit et al. 2008) 24

William Nordhaus from the Yale University, for instance, criticizes the Stern Report that the discount rate is to low taking into consideration interest and saving rates (Nordhaus 2007, p. 1).

31

The most important greenhouse gas is carbon dioxide. The following figure shows, in which sectors

this gas is emitted. A growing share of the global CO2 emissions is generated by the electricity and

heat sector. In 2008, this sector was responsible for about 40% of the emissions.

Figure 23: Global CO2 emissions by sector (source: IEA 2010b)

So, if the reduction of greenhouse gas emissions is important for future social welfare (especially in

the two shores of the Mediterranean Sea) and if CO2 is the most important greenhouse gas in the

atmosphere, then the reduction of the CO2 is very important for future social welfare. And if the

electricity and heat sector is the largest CO2 emitting sector, then emission reductions in this sector

will be especially important. Energy efficiency and the use of renewable energy sources are the way to

reach this. CSP can play a decisive role in the conversion of the electricity sector into a low carbon

sector. Desert areas on all continents with human settlements have the potential to generate the

electricity for a large part of the human population worldwide. CSP, possibly in combination with

photovoltaics, is able to provide the necessary electricity. Compared to photovoltaics, CSP has the

advantage to contribute more to firm generation capacity and to be able to deliver energy on demand.

The possibility of the integration of thermal storage systems gives CSP a key role in the use of solar

radiation for electricity generation. Taking into consideration that the south of Europe and MENA

belong to the parts of the world that will suffer most from climate change, the countries in these

regions should have a big interest in developing and installing CSP plants as soon as possible for

future low emission electricity generation.

32

3 Job market

The MENA countries suffer high unemployment rates. The job market is not sufficiently dynamic to

meet the rapidly growing population numbers. That’s why the unemployment grew over the last

decades. Unemployment is a growing social and economic problem in many MENA countries.25

A large-scale development of CSP in the MENA countries can give a new stimulus to the job market

in these countries. However, the creation of jobs due to the development of a new solar based energy

market depends largely on the question whether the production of the power plant components is done

in the MENA countries themselves or rather outside. At the moment, the technical know-how is

concentrated in European companies and investigation institutions. That’s why CSP development in

the MENA countries would imply a technology transfer. There are different strategies how such a

technology transfer can be realized. We can distinguish between a more vertical type of technology

transfer and a more horizontal type of technology transfer. These two types can be characterized in the

following way:

Vertical technology transfer:

- Technology is transferred via investment to a host country

- Transfer of know-how to local manufacturers and technological spillover are limited

- Managers and technical staff are nationals of the investing country, while the general

workforce is from the host country

Horizontal technology transfer:

- Formation of joint ventures between foreign and local companies, including technical and

business training

- Embedding of technology within local population and economy

- Skilled work is done by nationals of both sides

A positive stimulus to the job market in the MENA countries would be achieved in both strategies, but

the effect would be stronger and especially more sustainable if the technology transfer is done more

horizontally than vertically.

In an extremely vertical approach, all components are built abroad and put in place in the host country

by foreign companies. In this case the local job market would be stimulated in a minimal sense.

However, it was calculated that about 40,000 direct and 300,000 induced job years (1 job year equals

one person working one year on a job) would be created for the installation of 20 GW.26

Another, less vertical, approach could be that the involved companies set up factories in the host

countries to produce there the components. Even if this is still a vertical form of technology transfer,

more temporary jobs would be created. As we are speaking about quite a long process of CSP

development, these temporary jobs even may last quite long. However, only few jobs with higher

qualification requirements would be created (engineers, investigators etc.).

Most beneficial for the social development of the host country would be a horizontal approach, in

which not only the manufacturing is done in the host country, but in which the manufacture process is

done as cooperation between local and foreign companies. In such a horizontal strategy in form of

joint ventures, which includes technical and commercial cooperation and corresponding job training

with technological and economic know-how transfer, about 120,000 direct and 900,000 induced job

years would be generated in the MENA countries in the same 20GW-scenario. That means that a

horizontal strategy would triplicate the number of the generated direct and indirect job years compared

to a strictly vertical strategy. A more horizontal technology transfer with an enhanced effect on the

local job market would make possible higher local welfare gains.

25

See BMZ 2010, 15-16. 26

The numbers for both strategies are taken from Komendantova 2010.

33

Experiences in countries where CSP plants were built have shown that the effect on the job market is

considerable, especially if compared to the installation of comparable fossil fuel power plants. The

decisive difference is that a CSP plant implies a high initial investment, while it does not require fuel

costs during operation. A fossil fuel power plant, on the contrary, requires high fuel costs, while the

initial investment in general is quite low. The investment efforts, however, can require more local

manpower than the fuel supply. This is the case, at least, if the investment is done principally by local

companies. However, also the operation and maintenance efforts are higher for CSP plants than for

fossil fuel power plants, and they have to be covered by local manpower. Additionally, many jobs are

created indirectly. These jobs do not depend so much on the question whether the technology transfer

is done in a more horizontal or in a more vertical way. A positive job effect happens in any case as it is

expressed by the mentioned numbers; and these numbers are always higher than for fossil fuel power

plants, where a large part of the expenditures is done for the purchase of the fuel.

Studies were done about the macroeconomic impact of the construction of CSP plants in California as

well as in Spain.27

In a study about the Californian experiences a comparison was done between the

construction and operation of parabolic trough plants and the construction and operation of combined

cycle and simple cycle combustion power plants. The result is to be seen in the following figure. There

is a very large difference in the job creation effects between the installation of CSP power plants and

fossil fuel power plants. Also during operation the effect is considerably stronger.

Figure 24: Employment impacts of parabolic trough power plants in California in comparison to the employment impacts of conventional power plants (Stoddard 2006, p. 5_13)

Apart from the employment opportunities, welfare gains in the MENA states are also possible due to

direct incomes from the new energy market, additional tax income and also because of possible

positive currency effects due to positive national payment balance changes that are brought about by

increasing export rates. This topic is resumed in section 4 of chapter 15 “Economical Aspects”.

27

See Stoddard et al. 2006 and Caldés et al. 2009.

34

4 Stable relations in EU-MENA

Although there were manifold encounters between Europe and the MENA region during the history,

the political and cultural relations between these two regions have the potential to be much closer in

the future as they were in the last century. In this section, we shall analyze how the large-scale CSP

development in the MENA region could contribute to the further development of stable relations in the

EU-MENA region. We consider that such a stabilizing effect can be seen at least in four respects:

(a) New international market relations can have a stabilizing effect on international relations.

(b) A new energy partnership between the north and the south shore of the Mediterranean requires

enhanced economic, political and technological coordination between Europe and MENA.

(c) A solar-based energy market can reduce regional welfare disparities.

(d) Economic interrelations can foster intercultural understanding.

a) Stable international trade relations do not only have a generally positive and stimulatory effect

on the economic welfare of the involved countries. They have also a stabilizing effect on international

relations. Economic exchange can create mutual dependencies in the positive sense that the partners

are motivated to cooperate and to develop mutual respect and understanding. It is less likely that

serious conflicts arise between countries that cultivate multiple economic interrelations than between

countries that do not.

Compared to many other markets, the energy market is especially prone to shape international

relations. This has to do with the fact that the energy market is a profoundly political issue. Energy

supply is of public interest. Politics cannot be neutral in relation to the development of national energy

markets. It has to care about a secure, cost-effective and sustainable energy supply. And energy supply

development requires long-term strategies that cannot be guaranteed by the economic sector alone.

Additionally, energy markets are much more politically influenced and guided than other markets

because of the fact that the energy system involves monopolistic or oligopolistic structures (most

evidently the transmission system) that require public guidance and regulation. Now, as energy supply

in most cases implies international trade relations (fossil fuel market, grid interconnections etc.), the

energy market is not only an issue of national policies, but also of international policies and

diplomacy.

Mutual dependencies create stable relations, we said. But, not every type of dependency is positive.

Countries do not aspire to strong unidirectional dependencies, which make them vulnerable. Market

dependencies are only positive if the maintenance of a given trade relation is desirable but not

absolutely necessary for the further welfare of a country. A measure to avoid strong dependencies is

the establishment of diversified dependencies. Such diversified dependencies have a desirable

stabilizing effect on international relations: The trade partners are motivated to maintain a peaceful

coexistence in order to maintain their advantageous trade relations.

The energy market is susceptible to very strong dependencies. That’s why the search for the

diversification of the energy supplies (from the buyer’s perspective) respectively the diversification of

the energy sales market (from the seller’s perspective) is an important economic and political aim in

many countries. Parts of Europe, for example, suffer from strong dependencies and work on the

diversification of their energy supply. Central Europe faces a considerable energy dependency from

Russia (natural gas) and from the Arab world (oil). The recent development of the usage of renewable

energy sources has reduced this dependency slightly. Germany, for instance, generates already about

20% of its electricity from renewable energy sources. Especially the strong wind energy sector

contributes to this situation. The future import of solar power from the MENA countries and possibly

of hydropower from Scandinavia will diversify even more the energy sources. CSP can play its

35

defined role in the European energy mix and create a permanent and stable trade relationship between

Europe and the MENA countries. If a new solar-based energy partnership between Europe and the

MENA region is established, then CSP can contribute to the continuous regional stability in the

intercontinental EU-MENA region.

Concerning the undesirability of strong dependencies it has to be taken into consideration that the

development of a large-scale intercontinental solar energy market, as it is considered, for instance, in

the Desertec project, does not lead to a new strong energy dependency of European countries. First,

there would be many suppliers of solar energy, not just one country or one region, and there would be

several south-north transmission lines, which transport the energy from MENA to Europe. And,

second, the Desertec concept envisages the supply of only 15 to 17% of the European electricity

demand from solar sources in the MENA region. A breaking of the trade relations would not lead to

large blackouts in Europe, but could be compensated by other energy sources.

Additionally, from the European point of view, in a certain sense, the reliance on the import of solar

based electricity is less risky than the reliance on the import of finite fossil energy carriers: In the case

of fossil energy carriers the exporting countries could be motivated in a certain moment to reduce their

exportations because of their own needs or because of the expectation of future higher value-added

used of their fossil resources. In the case of solar energy this risk does not exist.

For the MENA countries, the development of an international solar energy market provides the chance

of a further diversification of their general market opportunities. However, as they are in the seller’s

position, the problem of strong dependencies arises much less (from a national point of view) than in

the case of the buyer.28

We can conclude that the development of an intercontinental solar power energy market generates new

desirable economic dependencies between Europe and the MENA region and promises, thus, the

creation of a new politically stabilizing element in the EU-MENA region.

b) Not only a new energy market would be created, but a direct political, economic and

technological cooperation would be required if large intercontinental CSP projects are realized. For the

construction of the CSP plants, an economic and technological cooperation of European and MENA

companies is desirable; for the grid development between Europe and the MENA countries, however,

a political cooperation is a necessary condition.

That means that it is not only the existence of stabilizing market interrelations in the long run that

favours international stability but also the preceding realization process, which has already been

initiated. The process of the realization of large CSP projects in the intercontinental EU-MENA

region, which requires ongoing international communication, represents therefore also a new

opportunity of international stabilization. The planning and investment phase implies an intensity of

international coordination that is not required, say, for a continuation of the existing oil-based energy

partnership.

c) Desert areas in general are not favourable for economic welfare. They are less productive and

living conditions are difficult. In many cases, deserts are a developmental problem for the countries

where they are located. Prosperity in countries that contain deserts is generated outside the deserts (for

instance in Morocco, USA, Australia) and in pure desert countries like some Arab countries it may be

generated on the basis of natural resources like oil or gas. However, if we consider fossil fuels as a

source of social welfare, then we have to take into consideration, first, that this source is distributed

unequally and, second, that it is finite in quite a short time frame. It is not easy to achieve a usage of

28

A buyer may found himself easily in a strong dependency situation if his welfare depends on the merchandise acquired from a certain trade partner, i.e. if the merchandise is very important for him and if he does not dispose of other sources that could supply him with it (or some suitable substitute) in case of the breaking of the existing trade relation. The selling country, on the contrary, normally has several active trade relations and does not depend strongly on one determinate trade relation.

36

desert areas that is sustainable for a very long time. Nevertheless, especially for countries with a high

share of desert land it is an important task to develop economic activities also in their desert areas.

An extensive use of the solar resource offers the possibility to make a reasonable economic use of

desert areas. This would help to reduce welfare differences between desert countries, some of which

have and some of which do not have fossil resources. As social differences generally imply a stability

problem, the more equal distribution of a future solar-based energy market, compared to the actual

fossil-fuel based one, may have a stabilizing effect also in this sense. Additionally, rural areas can be

developed that until now did not have interesting economic perspectives. This may reduce

development disparities within countries, which contributes to more welfare and also reduces social

tensions.

The development of rural areas in MENA countries is also an important political aim in the sense of

the development of new living space for the still rapidly growing population. Seawater desalination

and the generation of CSP electricity can be appropriate means to create new living space for many

people at the edges of the Sahara desert.

d) Trade relations can be favourable for intercultural understanding. If we have a look at history,

we see that international trade centres, as for instance the Hanseatic cities in the Baltic area29

, with a

corresponding cosmopolitan life, always counted as liberal in a positive sense. People from different

countries and cultures came together and had to get along with each other in order to be economically

successful. Such places could not be centres of intercultural intolerance.

This historic example of places where people from different cultures came together and developed a

kind of mutual understanding on the basis of common economic interests is plausible, but it shows at

the same time the limits of the supposed interrelation between international trade and intercultural

understanding: As long as the trade relation does not imply the personal involvement of people, there

may be no effect on intercultural understanding at all. Indeed, does the fact that a Sudanese student

uses the Microsoft Internet Explorer have any effect on his understanding of the North American way

of life? Most probably it does not. The massive tourism of Europeans in Morocco, Tunisia and Egypt,

on the other hand, even if we take seaside vacationers that never in their life visited the Egyptian

pyramids or even a simple mosque, surely does have an effect on the mutual understanding or at least

respect of people with quite a different cultural background, even if this effect may be difficult to

quantify.

So, also the case of the CSP development in the MENA countries and the subsequent energy export to

Europe, which would mean a continuous trade relation between Europe and the MENA countries, has

to be considered carefully. On the one hand, the European countries and the MENA countries have

different cultural imprints, so that a continuing enhanced economic relation between them has the

potential to enhance intercultural communication and understanding. On the other hand, the pure

electricity sale from the MENA countries to Europe may have no effect at all on intercultural

understanding besides the rather political implications we mentioned before. Solar electricity export

may substitute partially the oil export from the MENA countries to Europe, and there may be no

change at all in the intensity of social contacts between the people of the involved countries compared

to the situation of the actual oil-based energy market. Surely, there is also a certain understanding-

generating effect of the oil-based energy cooperation, but the switch to a solar-based energy

cooperation may have no additional effect at all. How much intercultural exchange can be generated

additionally by the development of CSP technology in the MENA countries and the subsequent energy

sale to Europe depends on how the following questions will be answered: To which extend the

transformation of the energy system will be considered as a common project of European and MENA

29

The Hanseatic League was an economic alliance of trading cities and their guilds that dominated trade along the coast of Northern Europe in the later Middle Ages.

37

countries? To which extend it will be possible to involve European and MENA partners together in the

planning of the changes and investments to come? How much international cooperation can be

realized in the construction and maintenance of the CSP plants and the corresponding grid structure?

Will it be possible to arouse public interest in the idea of a new solar-based energy partnership in large

parts of the involved societies? Only a cooperative and public-oriented approach can provoke that

future EU-MENA CSP projects can trigger new intercultural communication and understanding

processes.

38

5 Initiatives for the large-scale development of CSP in the MENA

region

In this section we will have a short look at the existing initiatives for the development of a new solar-

based energy partnership between Europe and the MENA region. For such a far-reaching project

initiatives are needed at the conceptual and educational as well as at the political and economic level.

In the following we will concentrate on the Desertec Foundation, which has developed the concept of

a large-scale energy export from the MENA region to Europe, the DLR Enermena project and the

Desertec University Network as educational initiatives, the inter-governmental Mediterranean Solar

Plan, which illustrates that the idea of a new RE-based energy partnership between the north and the

south shore of the Mediterranean is reflected in international policies, and, finally, the industrial

initiatives that have been formed for the practical implementation of this energy partnership.

5.1 Conceptual initiative: Desertec Foundation

In 2003, the Club of Rome30

, the Hamburg Climate Protection Fund and the National Energy Research

Centre of Jordan founded the Trans-Mediterrranean Renewable Energy Cooperation (TREC). TREC

developed the Desertec concept. On 20th January 2009 the non-profit Desertec Foundation emerged

from TREC. It was established in Berlin and its founding members are the German Association of the

Club of Rome, members of an international network of scientists as well as committed private

individuals. Its function is to promote the implementation of the Desertec concept around the world.

The Desertec concept, i.e. the concept of “clean power from deserts”, contains the idea to generate

electricity in the deserts around the world. Taking into consideration that the great majority of the

world population lives not so far away from deserts that no electric connection would be possible, the

Desertec concept is understood as a model to solve the energy problem at a global level. On all

inhabited continents of the Earth (i.e. all apart from Antarctica) deserts can be found. And there are

only few people who live so far away from them that an appropriate grid structure is not able to

transmit the electricity to them that could be generated in the deserts. The Desertec Foundation

emphasizes that the concept is concerned about future energy security as well as about climate

protection, fresh water generation, socio-economic development, security policy and international

cooperation.31

For the realisation of the Desertec idea not only CSP plants, but also PV plants and wind power plants

are considered. The principal idea is to use the deserts for energy production, not to promote a certain

technology. However, CSP technology plays a central role in the concept because it provides firm

capacity and power on demand. It can compensate fluctuating PV-based and wind-based power

generation.

The Desertec Foundation focuses so far on the EU-MENA region, which is the nearest application

case of the Desertec concept from the point of view of the initiators of the Foundation. However, the

Desertec Foundation is interested in a worldwide promotion of the Desertec concept.32

30

The Club of Rome is a non-commercial organization that pursues a global debate about different global political questions. It was founded in 1968 and its office is located in Winterthur (Switzerland). Members are scientists, economists, industrialists and other public persons. 31

See http://www.desertec.org/en/concept/. 32

In the USA comparable efforts are done in the Solar Grand Plan, which works on a national strategy to supply the USA with solar power with special emphasis on the deserts in the south western part of the country. Strategies for the other continents are still to be designed.

39

Scientific research about the Desertec concept and its feasibility was done principally by DLR. Central

documents of this research are the studies MED-CSP (Concentrating Solar Power for the

Mediterranean Region, 2005), TRANS-CSP (Trans-Mediterranean Interconnection for Concentrating

Solar Power, 2006), and AQUA-CSP (Concentrating Solar Power for Seawater Desalination, 2007).

5.2 Educational initiatives

- In 2009, DLR launched the project Enermena. Enermena has the general objective to support those

countries in MENA, which are about to implement their first CSP plants. It comprises educational

as well as technological aims:

Multiplication of local know-how

Dissemination of CSP technology

Analysis and optimization of CSP plants

Concrete measures are the installation of a network of meteorological stations, the implementation

of professional training courses, the writing and dissemination of academic teaching material, the

support of project developments, and the quality control in the construction process of the CSP

plants.

- The Desertec Foundation, in cooperation with the Tunisian National Advisory Council for

Scientific Research and Technology, founded on Nov 30, 2010 in Tunis a platform for scientific

cooperation, the Desertec University Network. Founding members besides the Desertec

Foundation are 18 universities and research centres of the MENA region. It is planned to expand

the network to a global platform in order to promote the realization of the Desertec concept in

different regions of the world.

The objectives of the Desertec University Network are:

to promote the international cooperation of public and private academic and scientific

institutions with the aim to contribute to the implementation of the Desertec concept,

to promote the education of skilled professionals, particularly in desert countries, which will

help to maximize those countries’ share in the value creation,

to carry out research and education for a continuous improvement of the implementation and

operation of future energy systems.

In the meantime, several European universities joined the network. The Desertec University

Network is interested to accept new member institutions.33

5.3 Mediterranean Solar Plan

In the meantime, the Desertec idea has found approval in politics. The European Commission supports

it34

and also the new Energy Plan of the German Government mentions explicitly the Desertec project.

The German Government wants to collaborate to identify the conditions for the realisation of the

33

Prerequisites are (1) to have a track record in Desertec-related activities, (2) a proposal by the heads of the institution to the Desertec University Network, (3) recommendations from two members and (4) the ability to contribute to the network. 34

See www.trec-uk.org.uk/endorsements.html.

40

Desertec project. Feasibility studies and an enhanced international dialogue in energetic and

developmental topics are envisaged.35

The institutionally most robust political structure, however, that supports the development of an

intercontinental solar-based energy market in the EU-MENA region is the Mediterranean Solar Plan,

an initiative of the European Union in the framework of the Euro-Mediterranean Partnership.

The general political cooperation between the EU and its Mediterranean neighbours got a firm impetus

in November 1995 with “The Euro-Mediterranean Partnership” set up in Barcelona (“The Barcelona

Process”). The Euro-Mediterranean Partnership, signed at the ministerial level, was joined by the EU

Member States and 12 partner countries around the Mediterranean: Algeria, Cyprus and Malta (both

EU members since 2004), Egypt, Israel, Jordan, Lebanon, Morocco, Palestinian Territories, Syria,

Tunisia and Turkey. Libya had observer status. It covered a large range of policy areas in the

Mediterranean basin: Political and Security Dialogue; Economic and Financial Partnership; Social,

Cultural and Human Partnership.

The Euro-Mediterranean Partnership was re-launched at the Paris Summit for the Mediterranean on

13th July 2008 under the French EU Presidency, when the Heads of State and governments of the

European and Mediterranean countries founded the Union for the Mediterranean, which has the aim to

promote a new form of cooperative partnership between the two shores of the Mediterranean Sea.

The Union for the Mediterranean pays special attention to concrete projects, among which is the

Mediterranean Solar Plan (MSP). The MSP does not only target solar energies, but aims at developing

renewable energies in general, energy efficiency measures, the reinforcement of the power grid

interconnections and the technology transfer in the Mediterranean region. It counts with the

participation of all member states of the Union for the Mediterranean as well as companies, investors,

financial institutions and other organizations interested in the project. The Mediterranean Solar Plan

addresses both supply and demand and it has the following mid-term guidelines:

1) to develop 20 GW of new renewable energy generation capacities on the South shore of the

Mediterranean by 2020

2) to achieve 20% energy savings around the Mediterranean by 2020 in comparison to a

business-as-usual scenario.

A high priority shall be given to the exploitation of the enormous potential of solar electricity

generation available in the Mediterranean countries, notably through the development of PV and CSP

plants, and of other available and mature renewable technologies. Additionally, the setup of a common

framework in terms of legal, regulatory and investment environment for the development of new

generation capacity from solar and other renewable energy sources (especially wind) in the countries

around the Mediterranean Sea is an important topic.

Compared to the approach of the Desertec Foundation, the MSP shifts its focus a bit more to the

satisfaction of the growing local electricity demand in the MENA countries themselves. However, also

the electricity export to Europe is considered. A regulatory framework for importing electricity to the

EU from non-EU countries is already in place, thanks to the possibility of so-called “joint projects”,

established in article 9 of the Directive 2009/28/EC on “the promotion of the use of energy from

renewable sources”. This Directive still has to be translated into national legislation in the EU member

states in order to enter in effect.36

It permits that the imported electricity from renewable sources from

other countries count for the EU countries as contributing to the own targets of reduction of

greenhouse-gas emissions. Additionally, it allows that energy produced outside the EU can be

35

See BMWI/BMU 2010. 36

See med-emip 2010, vol. 2. The Directive can be found at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:140:0016:0062:en:PDF

41

financially supported through laws promoting renewable energies as long as this energy export does

not lower the previous RE quota of the country of origin.37

5.4 Industrial Initiatives

In October 2009, the industrial initiative Dii was created under German law as a GmbH (limited

liability company) with shareholders from the industrial and finance sector. It was co-initiated by the

Desertec Foundation. At the beginning it had the name Desertec Industrial Initiative, but it changed it

later to Dii in order to avoid confusion with the non-commercial Desertec Foundation. The

shareholder firms are from different European and MENA countries. The mission of Dii is “to enable

the roll-out of the Desertec concept” for the EU-MENA region, i.e. the concept that “aims at supplying

MENA and Europe with power produced from sun and wind energy sources in the deserts. The long-

term intention is to satisfy a substantial part of the energy needs of the MENA countries and to meet

about 15% of Europe’s electricity demand by 2050.”38

Dii specifies its core objectives as:

- analyzing and developing a technical, economic, political and regulatory framework for

feasible investments into renewable energy and interconnected grids,

- originating some early reference projects to prove the feasibility of the concept,

- developing a long-term roll-out plan for the period up to 2050 providing investment and

financing guidance,

- conducting in-depth studies on specific subjects, e.g. siting issues, technology developments

or specific conditions in order to provide answers to key questions that will arise.

Dii concentrates on wind and solar energy and it focuses on the EU-MENA region. Up to 2012 its

activities will be aimed at creating conditions for viable business and investments for the realisation of

the Desertec idea with the already mentioned aim to supply around 15 % of Europe’s electricity by

2050.

In May 2010, the industrial initiative Medgrid (formerly Transgreen) was created. It was initiated by

French entities, but similarly to Dii, which changed from a German dominated initiative to an

international enterprise (under German legislation, but with an international shareholder structure),

Medgrid is now understood as a consortium open to companies from different European as well as

MENA countries.

While Dii focuses on the realization of the Desertec concept in EU-MENA in general, Medgrid

concentrates on the planning and implementation of the power line network between MENA and

Europe. The development of an international grid structure is a very large infrastructure project with

large investment volumes. Additionally, it is an international project. That’s why only an international

industrial consortium will be able to realize such a network. Medgrid, in which participate important

electricity suppliers and handlers and manufacturers of high voltage equipment, has the aim to be this

consortium. It considers as its most urgent work the realization of a feasibility study for a network of

high-voltage undersea power lines. These studies shall be accomplished until 2012.39

Medgrid works on the basis of the Mediterranean Solar Plan, especially on the plan to develop 20 GW

of new renewable energy generation capacities by 2020. It calculates with an investment of 6 Billion

Euros in grid infrastructure (grid accesses and new transmission lines), while the total cost of the

realisation of the Mediterranean Solar Plan is estimated to be 38 to 46 Billion Euros. It considers that

37

See Wupptertal Institute 2010, 16. 38

From www.dii-eumena.com. See also www.desertec.org. 39

See www.transgreen-psm.org.

42

only 5 GW of the 20 GW will be exported to Europe, while the other 15 GW will be used to satisfy the

growing electricity demand in the MENA countries themselves.

The concrete tasks of Medgrid are formulated as the following:

1) to propose technical and economical guidelines for the installation of a trans-Mediterranean

transmission grid, which is capable to transmit 5 GW from the MENA region to Europe by

2020,

2) to pursue a regulatory and institutional framework, which is favourable for the respective

investments in the MENA region (feed-in tariffs, sale of carbon certificates, fiscal incentives),

3) to evaluate the benefits of the infrastructure investments and the electricity exchanges in

relation to economic activities and growth, and to employment,

4) to develop technical and technological cooperation with MENA countries by means of

electrical connection projects in the Mediterranean,

5) to promote European industry and its technology, especially concerning energy generation on

the basis of renewable energy sources, DC transmission and ultra-high voltage sea cables.

Medgrid and Dii may appear to be competitors. However, both sides have announced strong

cooperation and excellent interaction with each other on the working level. Indeed, the two consortia

complement each other in a mutually beneficial way: Medgrid could deliver to Europe the energy (or

part of it) that has been generated by Dii in the MENA countries.40

At the end of this section we also want to mention the support by the World Bank through the Clean

Technology Fund for the realization of large-scale CSP projects in the MENA countries. In December

2009, the World Bank approved that it would participate with US$ 750 Million in financing 13 CSP

plants with 900MW total capacity in Egypt, Algeria, Tunisia, Morocco and Jordan corresponding to an

investment volume of US$ 5.5 billion.41

40

This is the evaluation of the Wuppertal Institute in Wuppertal Institute 2010, 19. 41

See Wuppertal Institute 2010, 18.

43

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