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Supergrids – a desert mirage?

By Dave Elliott

There have been reports that the Desertec Industrial Initiative (Dii) had abandoned its plan to help support the development of solar power in the Sahara and the export of some to Europe, since it looked as if the EU could meet most of its green energy needs indigenously, without significant imports. So is the desert CSP/supergrid idea dead? It certainly does seem to have been downplayed recently.  EurActiv quoted Dii CEO Paul van Son as saying ‘If we talk about renewable energy from North Africa, only a small fraction will ultimately supply the European market.’ He felt Europe could supply up to 90% itself.

That does still leave 10%, and the Dii plan was always only to export around 15% to Europe. Even so, it does seem that Dii is retrenching, given the withdrawal of founding shareholder Siemens, and failure to get the support from the financially-strapped Spanish government for a 500MW CSP demonstration project in Ouarzazate, Morocco. Nevertheless that project is still going ahead (160MW is underway), as are other CSP projects in North Africa, and German utility RWE is still backing Dii. It is negotiating on solar and wind projects in Morocco, though these would be for local use, without export. RWE said they were ‘convinced that the Desertec project is a very good opportunity to build up a renewable energy supply for North Africa. Although some people criticise the project, we believe that it will be successful in the long run’. But wind could be a new focus, not just solar: Dii’s ‘Economic Impacts of Desert Power’ report, presented at a conference in May last year in Casablanca, says wind, PV/CSP could become up to 5% of Morocco’s production in 2030, and Dii now sees itself as a local enabler for projects like this across the region. And Dii’s van Son still says ‘a net export of electricity is expected to have a noticeable size after 2020.’

However there has been no shortage of dissension: even the independent  DESERTEC Foundation, who first launched the desert solar idea, has now severed links with Dii, consortium, claiming that there were ‘irresolvable disputes’ for example over its allegedly ‘top-down’ management style, with insufficient attention being paid to local concerns. 

Issues like that were of course amongst those raised by decentralist greens, like the late  Herman Scheer, who saw it all as too centralized and corporate.  More recently, some green industrial groups have also challenged the economics. Peter Droege, president of Eurosolar, said it was ‘not viable in its original form because it is too expensive and utopian. It attracted very little funding. It has essentially collapsed into more or less a bilateral deal.’  Susanne Nies, from Eurelectric, told Euractiv ‘Spain is already struggling with its own excess renewables production – additional imports from third countries would certainly compound the problem’. So demand for the power might be low. Moreover, some worry that the matching of supply and demand could be a challenge for the supergrid idea as a whole, including for a full cross-EU network:  there may not always be sufficient excess electricity available for and from the supergrid to meet local peak demands. And even if there was, how expensive would it be?

Too much power or too little?

The wider political debate will no doubt continue, but to make sense of the economic issues we clearly need some modeling.  That would involve making assumptions about capacity and links across the EU and running it against demand time series data.  Something like this has been done. See EWEA’s Tradewind study and Aboumahboub et al ‘Optimization of the utilization of renewable energy sources in the electricity sector’, 2010/Cambridge/EE/EE-29.pdf  That divided the EU up into hexagonal regions of 600 km size (330km radius), and used hourly data for solar, wind, and energy demand.  Assuming that renewable expanded to supply 100% of electricity by 2050, it found that the need for backup would be halved, if there was a full supergrid network. But this is just a physical model. It doesn’t give any idea of the major economic interactions that would evolve, or their impacts.  Would all the power be exchanged? Would there always be enough? At what price? Would markets balance the system?  There are plans to establish new ‘capacity markets’ to incentivise companies to offer back up, storage and balancing capacity.  They may make supergrids less attractive, but it’s hard to say. If backup or storage capacity already exist somewhere else, it may be cheaper just to link to it.  Maybe what is needed is a Cross-feed Tariff to support that, if the market alone is not enough.

There ought however to be enough incentive given the huge sums that can be made in the balancing market. When there are shortfalls, spot prices can rise dramatically. In March last year the spot price for UK power shot up to £200/MWh for a while, making offshore wind, at around £130/MWh, look cheap, and on-land wind, at around £90/MWh, even cheaper. That said, a supergrid would be pricey and would not be used all the time. Some argue that inter-connectors only really work well for small countries with small grids next door to large countries with large generation capacities (Ireland in relation to the UK for example), but it’s the big countries that actually need them most. Germany already has a range of links, but some if its neighbours don’t like that. They complain about power being shunted around their grid systems for no gain to them.

If we extend the idea even further to North Africa with desert solar feeds, there is even more potential for conflicts of interest and exploitation. Some serious agreements on transmission contracts will have to be negotiated.  However, given the role it could play in balancing the EU’s variable renewables, it seems unlikely that the potential for importing energy derived from huge solar resources of North Africa will be ignored indefinitely.

Meanwhile, a start is being made on the supergrid in the North, with more links across the North sea planned. Norway’s Statnet is to build a 1.4 GW High Voltage Direct Current inter-connector to the UK by 2020. In 2012 and National Grid agreed to look at a UK-Denmark link. There’s already a 2GW French link, a 1GW Dutch link and a 1GW Belgian link is planned for 2018. There are also proposals for a series of North- South 1000 MW, 660 km HVDC lines across Germany, in an €10 bn project.

I will be looking at incremental approaches like this, and at how the whole thing might work, in my next post.


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