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Setting out the facts of EU-MENA renewables

Everyone knows that the topics of climate change and renewable energy are fiendishly complicated and controversial. Misconceptions, inaccurate assumptions, and factual uncertainty continue to hamper discussion; and the technical, scientific and economic complexity that surrounds the field acts as a further barrier to understanding.

To try to address this, we've put together the following series of “Mythbusters”, in which we attempt to debunk – in simple, bullet-point form – some of the more common misconceptions that we encounter in our work with MPs and citizens around the world.

Here, we're dealing with energy trading between the solar-rich deserts of North Africa and the energy-hungry cities and industrial centres of the European Union. With the collapse of the Desertec project, many have written off large-scale energy trading between the two regions, citing several concerns, which we'll look at in detail below.

MYTH: “Renewable energy is more expensive than electricity from fossil fuels”

  • Rapidly improving technology, economies of scale, and significant global investment are all driving rapid reductions in price for renewables. Between 2007-12, manufacturing costs for solar panels fell 75%.

  • These cost reductions mean that, in many parts of the world, renewables are already cheaper than fossil fuels - in energy analyst lingo, they've "reached grid parity".

  • In January 2014, analysts at Deutsche Bank found solar to be at grid parity in 19 key global markets, including Australia, California, China, Germany, Greece, Israel, Italy, Mexico, South Africa, Spain, and Turkey.

  • In January 2015, Deutsche Bank predicted that that solar systems will be at grid parity in up to 80 per cent of the global market by 2017.

  • This is all despite the huge government subsidies that currently prop up the coal, oil and gas industry around the world. In 2013, the IMF calculated that direct and indirect public subsidies to fossil fuels were worth a staggering $1.9 trillion – the equivalent of 2.5% of global GDP. In comparison, renewables received only $88 billion worth of subsidies.

MYTH: “Importing MENA solar energy is too expensive”

  • If sufficient energy connections were made between Europe and North African and Middle Eastern countries, the cost of importing would be about the same as the price Italy pays for electricity today.

  • As fossil fuels are a finite resource, the cost to produce energy from coal, gas and oil can only rise over the long term. Add in the impact of projected future carbon taxes, and the price of energy from fossil fuels is likely to rise considerably by 2050.

  • And price isn't the only economic benefit - a study by McKinsey found that a concerted push for renewables in Europe would create up to half a million new jobs.

MYTH: “The EU should produce its own renewable energy and not rely on North African solar”

  • Several studies have found that the EU would save around €33 billion a year by importing 20% of its electricity from North African renewables, compared to just producing renewable energy domestically.

  • The study found that, including the cost to install cross-Mediterranean interconnections as well as transmission losses, the average cost of electricity would be just €58/MWh with an interconnected EU-MENA network, compared to €73/MWh without it.

  • The savings are largely due to the benefits of interconnection, which allows supply and demand to be easily balanced, and reduced curtailment (the time renewables have to be switched off for to balance over-supply in the grid) for EU renewables, as well as cheaper land & labour in the Maghreb.

  • A Greenpeace study found that developing a EU-MENA supergrid would cost around €60 billion, but would save up to €60 billion in reduced curtailment alone – meaning that the supergrid could effectively pay for itself!

  • Of course, integrating MENA renewable energy sources into the European grid is not a substitute for maximising renewable energy production within Europe itself. Imported North African electricity is not a replacement for locally-produced wind, solar or hydro power; it must be a complimentary source of energy, working in tandem with national renewables to provide stable, sustainable electricity at scale.

MYTH: “Importing MENA solar energy is a form of neo-colonialism”

  • Some sceptics have tried to portray large-scale solar exports as a colonialist resource grab from rich Western nations. Yet the nations of the Maghreb would see significant benefits from the creation of an export market – far greater than those accruing from the sale of fossil fuels.

  • Investment in large-scale renewable energy in the MENA region would spur sustainable economic growth North Africa by fighting energy poverty, reducing reliance on expensive fossil fuels, generating thousands of new jobs, and creating new sources of export revenue from the sale of clean, reliable electricity.

  • Per dollar invested, renewable technology creates three times as many jobs as fossil fuel industries.

  • Renewable energy exports from North Africa to Europe could generate over €60 billion in export revenues per annum – more than Morocco and Egypt's current export revenues combined.

  • MENA exports of solar energy to the EU would be far more beneficial than existing exports of oil and gas, for the simple reason that sunlight is effectively an infinite resource: unlike fossil fuel reserves, it will never run out.

  • As Dhamir Mannai, a Tunisian MP, put it at a recent Climate Parliament hearing: “We have the solar resources, and we want to export them to Europe. For the EU to refuse to buy our solar energy – this would be colonialist”.

MYTH: “Importing MENA solar energy will undermine European energy security”

  • At present, EU electricity production relies heavily on imported coal and gas, the vast majority of which comes from just a handful of suppliers like Russia, Libya and Algeria. As recent events in Ukraine have shown, diversifying the EU's energy supply can only improve the region's energy security.

  • A recent study by McKinsey found that “security of supply concerns are likely overrated”: if 15% of the total EU supply came from the MENA region, no more than 5% would come from any one country, and the power would flow over dozens of cables.

  • The McKinsey study concluded that, therefore, “the share of the total supply exposed to individual points of disruption is of a similar magnitude to that which European grid managers already deal with today”.

  • Finally, solar producers would have far less incentive to restrict supplies for political or strategic reasons than fossil fuel exporters. Unlike coal, oil or gas, which can be stored indefinitely, sold to anyone, and are highly price elastic (ie: restricting supply drives up the price, as in the OPEC oil crisis of the 1970s), solar energy is infinite and cannot be stored.

  • This means that the nations of the Maghreb would gain nothing by restricting their exports of solar to the EU. They would be unable to sell the energy to anyone else, as photons cannot be shipped by container freight or in tankers, and would thus lose billions of dollars in export revenues.

Agree or disagree with any of the points laid out above? Let us know in the comments section below, or send me an email - ben[@]!

- Ben Martin, Editor

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