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Mena 'can earn $90bn from green energy project'

Dubai, July 20, 2009

Desertec, a major green energy project, has the potential to generate up to $90 billion per annum for the Mena region by selling electricity to Europe, according to a leading consulting firm.

Desertec, presently is a concept that outlines an approach for the sustainable supply of electricity for Europe, the Middle East and North Africa, using renewable energy sources up to the year 2050.

It focuses on setting up a viable transition to an electricity supply that is inexpensive, environmentally friendly and based on secure resources.

A consortium including 15 of Germany’s largest companies and institutions plans to invest more than $ 560 billion in Mena in solar thermal power plants and transmission grids to cover 15 per cent of the annual European electricity demand with green energy.

Energy giants such as E.ON and RWE as well as Siemens, Deutsche Bank, Münchner Rückversicherung, Club of Rome and the German Government are in discussions and have founded a consortium on July 13.

“The challenge is to establish a future electricity supply that mixes available technologies and resources capable of satisfying not only the criterion of power on demand, but meets other criteria for sustainability as well,” explained Dr Dirk Buchta, vice president and managing director, A.T. Kearney Middle East.

“The necessary measures for this will take at least two decades to become effective, demanding, comprehensive policy and economic frameworks for its realization.”

“The success of the project will depend on close cooperation between Europe and the region to effectively introduce renewable energy via the interconnection of electricity grids by high-voltage direct-current transmission.” added Dr Buchta.

According to A.T. Kearney calculations, potential revenues for the Middle East and North Africa may reach for $ 90 billion per annum. Considering the total investment of almost $490 billion only for the solar thermal power plants, this would lead to an investment/payback ratio, not considering the ramp-up, in the steady state of 1:5.

“Solar thermal power is one lever to reduce the expected supply demand imbalances in the Middle East,” said Christian von Tschirschky, principal at A.T. Kearney Middle East.

“Depending on the country there are significant supply and demand imbalances especially during the summer months at peak times. Due to increasing demand this gap will further increase,” he added.

A.T. Kearney estimates the total imbalance for the year 2020 will be around 4.5 GW in Abu Dhabi only.

Desertec investments will be scattered between different countries in the Middle East and North Africa. All countries in this region will compete for stakes in the overall Desertec project.

“Our annual published A.T. Kearney Foreign Direct Investment-Index has shown that countries with a political and financial stable environment, a reliable regulatory and legal environment meet some of the key criteria required to attract foreign direct investment and hence a major share of the Desertec investment” added von Tschirschky.

A.T. Kearney said that the Desertec project may act as an accelerator to close the supply gap with green energy.

“Solar thermal power capacities may be ramped up in the Middle East to meet the own electricity demand in peak times and provide energy to the Desertec grid generating additional revenues in off-peak times,” concluded von Tschirschky. – TradeArabia News Service




Tags: Dubai | A T Kearney | Desertec | energy project |

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