MED-CSP Concentrating Solar Power for the Mediterranean Region WP0: Introduction

1. MED-CSP Concentrating Solar Power for the Mediterranean Region WP0: Introduction WP1: Sustainability Goals WP2: Renewable Energy Technologies WP3: Renewable Energy Resources WP4: Demand Side Analysis WP5: Scenario & Market Strategies WP6: Socio-Economic Impacts WP7: Environmental Impacts

2. Socio-Economic Impact of the MED-CSP Scenario • The scarcity of freshwater resources is challenging food independency and social stability of a growing population in MENA. Efficient production and use of freshwater is a vital issue in this region. The pressing need for sea water desalination leads to higher energy demand and to an unavoidable additional burden for the national economies. There is no sustainable solution for water security based on fossil or nuclear energy, and moreover, there is a growing conflict between domestic consumption and export of fossil fuels. At present, we experience increasing pressure on fossil fuel resources on a global scale, and a painful elevation of fuel prices. Renewable energies and in a first place concentrated solar thermal power offers a solution. Renewable energies can relieve the national economies from energy and water subsidies through: • lower cost of primary energy • lower external costs of energy • income from export of solar electricity • income from export of saved fuels • income from emission trading • In the coming decades, the MENA countries are facing an era of strong economic growth. In the long term, this process would place the MENA economies on equal eye level with Europe. However, the increasing scarcity of water and the elevated cost of fossil fuels will burden their economic development just in the critical phase of this period, possibly depriving them from their right to follow this path of economic equalization. At the end of the oil-age, the MENA countries must now shift to their more plentiful and long-lasting domestic energy sources: renewable energies. This process requires not more than adequate initial investment by the governments of the EU-MENA region. The benefits are numerous: The direct costs of energy production and the external (social) costs of the damages induced by power generation can be reduced. Additional national income can be generated by exporting not only saved fuels, but also renewable electricity to Europe. The availability of fossil fuels will be stretched over centuries and its consumption reduced to a level compatible with the environment. Oil wars will become obsolete. Future generations will still be able to use the valuable oil and gas resources while the MENA region will become wealthy and economically strong. The fact that renewable energies are much more evenly distributed than oil or gas reserves will lead to an eye-level approximation of the national economies of the EU-MENA region. The economic gap between countries like Yemen and Spain will slowly disappear to the benefit of both. • Arable land resources in MENA and world wide are disappearing at a speed of several hectares per minute. Concentrating solar multipurpose plants in the margins of the desert could generate solar electricity for domestic use and export, freshwater from seawater desalination and provide shade for agriculture and other human activities. Such plants could turn waste land into arable land and create labor opportunities in the agriculture and food sector. Tourism and other industries could follow. Desertification could be stopped. • Using solar energy means manufacturing machines that use renewable energies. It means replacing minerals from the subsoil by capital goods. Renewable energies require a lot of labor on all industrial levels from base materials like steel, glass and concrete to civil engineering and high tech-applications. Increased industrial activities will create job opportunities and reduce the brain-drain from MENA to the industrial countries. • Solar energy and saltwater are unlimited resources if used in a way compatible with environmental and socio-economical constraints. The economic figures of most renewable energies indicate clearly that within a manageable time span they will become much more cost effective than fossil fuels. Renewable energies are the least cost option for energy and water security in MENA. It is obvious that it does not make any sense to wait. This process must start immediately.

3. Technology Learning Curves: CSP is not an Exception

4. 5 MW 50 – 100 MW 200 – 400 MW Cost Learning Curves of CSP Components

5. increased solar share Specific Investment of Power Technologies

6. Discount Rate 5 % 2000-$ Electricity Cost of Power Technologies (Example)

7. General Parameters used for the Scenario Calculations and Example for Typical Electricity Costs in the Starting Phase

8. ct/kWh cost of CO2-Sequestration Cost of Electricity from Coal, Gas & Nuclear Energy

9. International Crude Oil and Natural Gas Prices equiv. to 40 $/bbl Crude Oils Natural Gas

11. 2020 2015 2050 Start: 2006 possible from today’s perspective IEA scenario fossil fuel cost: escalation rates from 0.4 to 1.2 %/y Source:IEAMED-CSP equivalent solar energy cost: return on investment from 6 to 12 %/y

12. Dollars per cubic meter Dollars per cubic meter The present status of water pricing in the MENA Region /Saghir 2003/ a) Irrigation Sector b) Municipal Sector

13. State of the Art of Seawater Desalination Sources: La Desalacion como alternativa al PHN, Gobierno de Aragon, 2001 Review of Water Resources and Desalination Technologies, Sandia 2003

14. Cost of Water desalted by CSP in Cogeneration with MED for 4, 9 and 14% Rate of Return, Electricity Cost 4 ct/kWh Cost Range in Selected Remote Regions Cost Range of City Water in MENA 14 % Interest Rate 9 % Interest Rate 4 % Interest Rate Cost of Irrigation

15. Peaking Load 14 % Interest Rate 9 % Interest Rate 4 % Interest Rate Base Load Cost of Electricity by CSP in Cogeneration with MED for 4, 9 and 14% Rate of Return, Water Cost 0.50 $/m³

16. Alternatives for Sustainable Energy and Water in MENA • Oil/Gas: High Cost Escalation • Growing Domestic Needs will compete with Exports • Climate vs. Cost (CO2-Sequestration adds 2 - 3 ct/kWh) • Coal: Less Cost Escalation than Oil & Gas MENA would shift from Energy Exporter to Energy Importer New Source will require Infrastructure and Investment Climate vs. Cost (CO2-Sequestration adds 2 - 3 ct/kWh) • Nuclear: Despite of massive subsidies < 1 % Market Share • MENA would shift from Energy Exporter to Energy Importer • New Source will require Infrastructure and Investment • Security vs. Cost (Nuclear Waste Disposal, etc. etc.) • Solar: Cost De-Escalation and High Growth Rates • MENA will export Oil/Gas + Solar Power • New Source will require Infrastructure and Investment • Climate + Security + Low Cost

17. Population density in persons/km² in the EU-MENA Region Source: LandScan 2004

18. Satellite View of the EU-MENA Region at Night

19. Solar Wind Hydro Geothermal Biomass EURO-MED possible further inter-connections Projection of a future Trans-Mediterranean Grid interconnecting the Best Sites for Renewable Energy Use in EU-MENA

20. Population density in persons/km² in the Middle East Source: LandScan 2004

21. Population density in persons/km² in Maghreb and Southern Europe Source: LandScan 2004