The vision of Sahara Green is to built locally Concentrated Solar Power stations arround the Sahara Desert, in order to fight against the desertification, produce desalinated water, and to create jobs locally. The world bank did a study on the potential of local manufacturing of CSP systems, in North of Africa and Middle East.
The North of Africa & Middle East (MENA) region has amongst the world's best conditions for concentrated solar power (CSP) : abundant sunshine, low precipitation, plenty of unused flat land close to road networks and transmission grids. It is also close to Europe, where green electricity is much valued.
However, high initial capital costs remain a significant issue for adoption of CSP technology. To make CSP projects in MENA cost effective in the short to medium term, a combination of factors is necessary, including local incentives, concessional finance and export of green electricity to Europe. The MENA CSP scale-up Investment Plan (MENA CSP IP), supported by the World Bank and the African Development Bank (AfDB), is intended to strategically utilize concessional financing from the Clean Technology Fund (CTF) to accelerate global adoption of the technology in the region. It was endorsed by the CTF Trust Fund Committee on December 2, 2009, and will support expansion programs in five countries of the MENA region, Algeria, Egypt, Jordan, Morocco and Tunisia.
In the longer term, to make concessional finance less critical, generation costs will need to be dramatically lower. This implies that investment costs, and therefore manufacturing costs of the main components and systems, need to decrease. It will be made possible by a combination of technical innovation, economies of scale, and experience curve effect. The potential for such cost decrease is considerable, as CSP is a young industry, with a limited number of large or experienced players. MENA, like other emerging regions of the world, has technical and industrial capabilities which are likely to form a good basis on which to build CSP- related activities, as shown for example by the strong auto parts industry in several countries of the region. It could become home to a new, high potential industry, serving the local markets, as well as existing markets in Southern Europe, in the US and elsewhere. The region could benefit from significant job and wealth creation, while the world energy sector would benefit from increased competition and lower costs in CSP equipment manufacturing.
To assess the local manufacturing potential for CSP components in the MENA region, a study was commissioned by the World Bank with donor support from the Energy Sector Management Assistance Program (ESMAP).
Summary of this Study Report :
Concentrated Solar Power (CSP) is a renewable energy technology which, after a period of stagnation, has started to penetrate the energy market, particularly in Spain and the United States but also in the Middle East and North Africa Region (MENA) as well as other regions of the world. To run CSP projects in MENA competitively in the short and medium term, a portfolio of different support schemes for CSP plants is necessary, including climate finance and concessional loans, revenues from solar electricity exports to Europe, and national incentives (like long-term power purchase agreements (PPA), feed-in tariffs, or tax rebates).
As a concrete step toward realizing these strategies, a ―MENA CSP scale-up Investment Plan‖ (MENA CSP IP) was prepared by the World Bank and the African Development Bank (AfDB), and endorsed by the Clean Technology Fund (CTF) Trust Fund Committee on December 2, 2009. This plan is a landmark climate change mitigation program aimed at co-financing nine commercial-scale power plants (totaling around 1.2 GW) and two strategic transmission projects in five countries of the MENA Region (Algeria, Egypt, Jordan, Morocco and Tunisia, called the ―MENA CTF‖ countries in the rest of this report). The vision is for the Mediterranean MENA countries ultimately to become major suppliers and consumers of CSP-generated electricity. The MENA CSP IP is conceived as a transformational program, leading to the installation of at least 5 GW of CSP capacity in MENA by 2020, based on the 1.2 GW triggered by the MENA CSP IP. The first projects are expected to start commercial operations by 2014, and initially to supply domestic markets in MENA countries.
MENA could become home to a new industry with great potential in a region with considerable solar energy resources. If the CSP market increases rapidly in the next few years, the region could benefit from significant job and wealth creation, as well as from enough power supply to satisfy the growing demand, while the world‘s renewable energy sector would benefit from increased competition and lower costs in CSP equipment manufacturing.
The transformational opportunity from local manufacturing of CSP in MENA countries could benefit from the following interrelated factors:
- MENA CSP is well placed to benefit from the massive scale-up of concessional climate financing envisaged under the United Nations Framework Convention on Climate Change (UNFCCC), and recently reaffirmed at the Copenhagen and Cancun conferences. The CTF allocation for the MENA CSP IP could be the seed money for financing a more ambitious scale-up. CSP in MENA and other regions could benefit from the recent Cancun agreements in 2010 which have opened the way for a much larger funding framework. The climate conference of Cancun agreed on a Green Climate Fund of $100bn a year of climate funding from 2020 onwards that will be generated from a "wide variety of sources, public and private, bilateral and multilateral, including alternative sources." This could include a range of mechanisms such as auctioning carbon credits and levies on international aviation and shipping.
- MENA CSP is central to the high-level political agreement between MENA and the European Union to make solar energy trade a fundamental pillar of MENA-EU economic integration, and it therefore presents a major opportunity for MENA to earn export revenue. MENA CSP could be key to realizing the EU's GHG emissions reduction and energy security objectives. The April 2009 EU Renewable Energy Directive, with its provisions for the import of renewable energy to achieve the mandatory renewable energy targets of EU member states, is a first step in that process, as are the Desertec Industry Initiative and the Transgreen/Medgrid Initiative. The political initiative of the Mediterranean Solar Plan may act as an umbrella for initiatives such as Desertec at a bilateral level.
- MENA's oil-producing countries are embarking on CSP investment programs to liberate oil and gas from the power sector for higher value-added uses and exports, and in the longer term for CSP energy export.
The combination of these factors could uniquely advantage MENA as a global location of choice for CSP production and, while creating demand for installed capacity, could strongly drive local manufacturing.
The analysis provided in this report is based on the assumption that the volume of the installed CSP capacity within the MENA region is a main precondition for the emergence of local manufacturing. The opportunity for local manufacturing of different components in the value chain depends on scenarios that represent critical levels of market development. The market volume is described for the five MENA CTF countries investigated in detail in this study in the form of three scenarios (figure ES-1). For the MENA region as a whole it can be assumed that the market volume could be twice as large as in the MENA CTF countries alone.
Scenario A - Stagnation:
The home market volume of the five MENA CTF countries amounts to 0.5 GW only. Strong obstacles to local manufacturing of CSP components remain in MENA countries and most components, particularly thosewhose production requires high investment costs, are imported from more advanced markets. This scenario implies an incomplete realization of the MENA CSP IP.
Scenario B - No-replication:
The home market volume of the five MENA CTF countries amounts to 1 GW in 2020, which is strictly the MENA CSP IP target without any significant replication effect. In this scenario, the market offers some opportunities for the development of local manufacturing of CSP components and provision of CSP services.
Scenario C - Transformation:
This scenario implies the full success of the MENA CSP IP, and the development of a strong local manufacturing industry, with 5 GW of CSP by 2020 in the MENA CTF countries, as well as 2 GW worth of exported components. Such a scenario may materialize under favorable conditions only. A more conservative level of installed power may be found somewhere between the « no-replication » scenario and the « transformation‖ » scenario; the purpose here was to estimate a range rather than to come up with a precise figure for how many GW out of the 5+2 underlying this scenario will be realized by 2020.
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