Tuesday, October 13, 2009

The two faces of business reform in Egypt

By courtesy sxc.huNews Focus

International Shipping Changes CourseAfter a difficult year Suez Canal earnings begin a mild recovery

Tips for SurvivalFor many, tip-based and street jobs offer a better opportunity than the formal labor market

Waiting for a TrickleA new report says the majority of Egyptians have not benefited from the country’s economic growth

Fair PlayEgyptian authorities consider anti-dumping case against cheap Turkish steel

IMF Bolsters Egypt’s ReservesAnalysts question whether the $1.2-billion boost to international reserves is really necessary

Transparency or Collusion?Real estate developers promise to establish a federation to regulate the sector, but it runs the risk of dampening competition

While We Were SleepingA reporter’s notebook on the story Ramadan: Food

Doing BusinessThe two faces of business reform in Egypt

A Home of Their OwnPotential changes to real estate law would give prospective homeowners more options



By courtesy Desertec
October 2009
Desert Fuel
Forward-thinking or overly ambitious? A plan to use the MENA region’s vast deserts to generate solar power for Europe is raising eyebrows.

By Jeff Neumann

It could be a savior or a half-trillion dollar bust, but if one group of scientists’ scheme works, patches of the Sahara Desert could supply at least 15% of Europe’s electricity needs in the next 30 years through solar energy.

Stretching from Morocco to the Gulf to Turkey, a vast network of solar panels would power much of the continent and the MENA region at an estimated price tag of $560 billion. If nothing else, it is ambitious.

The main proponent of the energy plan, the Desertec Foundation, is a joint operation between members from global think tank the Club of Rome and the TREC network (Trans-Mediterranean Renewable Energy Cooperation) of scientists and engineers. The plan’s high-profile supporters include Deutsche Bank and Siemens, among other major financial institutions and companies.

Middle Eastern countries have been producing much of the world’s energy supply for over half a century, mostly through oil and natural gas. Harnessing the sun could be the region’s next big moneymaker. In a report from United States-based environmental think tank World Resources Institute (WRI), estimates suggest that “the amount of solar resource striking 6,000 square kilometers of desert in North Africa could supply thermal energy equivalent to the entire oil production of the Middle East — some 9 billion barrels a year.”

As much of the world attempts to move away from fossil fuels, the race to establish clean renewable sources of energy is in full swing. Egypt’s Supreme Council for Energy stated two years ago that by 2020 at least 20% of Egypt’s electricity should come from renewable sources. While those sources are mostly wind and hydroelectric, solar could become a significant contributor too.

The Paris Summit for the Mediterranean in July of last year established the Mediterranean Solar Plan — a scheme to fuse European technical expertise with the abundance of empty, sun-drenched deserts in North Africa and the Arabian Peninsula. By 2020, the plan says, 20 gigawatts (GW) of new renewable energy sources should be realized every year. Between 10 and 12GW of that would be provided through concentrated solar power (CSP).

According to statistics from the Ministry of Electricity and Energy, in 2008 Egypt generated 125,129 Gigawatt hours (Gwh) of electricity, mainly through oil and gas. Renewables — in Egypt’s case, mostly hydroelectric power from the Aswan Dam and some wind farms — today account for only a tiny fraction of that amount.

According to Desertec, CSP could produce the entire world’s electricity by using only 1% of its deserts. The Energy Information Administration, an arm of the US Department of Energy, this year stated that global energy consumption is set to increase by 44% between 2009 and 2030. The greatest increase in demand will come from developing nations.

If the plan is successful, many new jobs will be created in the host countries. According to Dr. Hani El Nokraschy, vice chairman of Desertec’s supervisory board, the “production of components, erection of the power stations, running these power stations and maintaining them,” will provide countries such as Egypt with countless job opportunities. Once established, the planning and design of new power stations and the recycling of older ones could produce even more jobs locally.

As with any plan that fuses private business, government and over a half trillion dollars, the Desertec proposal has some vocal critics. Among them, German MP Dr. Herman Scheer, who said bluntly in a statement released the same day as Desertec’s announcement, that, “the Desertec project Power for Northern Europe from the Sahara desert is a fata morgana [mirage]. The initiators know: There is no prospect of success.” He also serves as general chairman of the World Council for Renewable Energy and president of the European Association for Renewable Energy (Eurosolar).

However, without completely writing the Desertec plan off as fantasy, Scheer said it “could be a good idea indeed. If the aim were to enable the Sahara countries to make the transition to energy generation completely from renewable sources, I would fully agree to the Desertec plan. [] Given their solar and wind power potentials, these countries would even be able to completely move to renewable energy for their electricity supply within less than 20 years. The beneficial effect to their economies would be much stronger compared with exporting power to Europe.”

One of the biggest questions is just how much Egypt, and other host countries, would benefit from the use of its land to generate power for foreign nations. El Nokraschy says many of the components for the solar panels will be produced here and that “it is understood that the major part of the produced electricity will be consumed in the host countries and only about 20% will be exported to EU.”

Desertec must also deal with a skeptical populace. Europe has a long history of taking resources from Africa and the Middle East, often illegally and usually by coercion — facts not lost on Desertec.

“Most of the host countries were colonized by [a European] country within the past two centuries. Accordingly, it is not surprising when they think that Desertec aims to extend the EU influence again into Africa in a new form that is called Neo-Colonialism,” says El Nokraschy. He stresses that the plan is a partnership and that “partnership means that both partners will benefit from the project.”

El Nokraschy points to climate change as the biggest reason for the plan to go forward. Rising sea levels are already harming the fertile Nile Delta and the coastline of southern Europe, he says.

The Sahara’s legendary khamseen sandstorms are also a major concern. Shifting dunes could easily smother solar panels in remote areas and walls of moving sand can block out the sun for days on end.

As El Nokraschy says, the project is not just about energy, it could also address another major concern of the region: water. “Desertec offers [] a very elegant solution to produce electricity with high-grade superheated steam, produced from concentrating the sunrays.” He says that steam produced in this way is the most economic method for desalinating water. “Moreover it gets cheaper with time [] while the fossil-based processes get more expensive because of rising fuel costs.”

Desertec’s literature lumps the Middle East, North Africa and Europe into what it calls EUMENA. Coining the term EUMENA is perhaps one way to change the perception that the plan will only benefit European countries.

In terms of energy supply, the MENA region would stand to benefit the most from the Desertec plan, with 80% of the electricity staying with host countries for domestic needs, including the desalination of seawater. Water scarcity is nothing new to the region, but it has come to the forefront recently with conflicts between Egypt and sub-Saharan nations over Nile rights, as well as rights to water flowing into Iraq through Turkey and Syria via the Euphrates River. Satisfying the regions water demands is no small task.

While international companies rush to jump on the lucrative ‘green’ bandwagon, the realities of the global recession have hit some of them hard. According to a New York Times report this summer, solar manufacturer Q-Cells, the second-largest company of its kind in the world, laid off 500 employees in mid-August and cancelled several production lines to stop financial hemorrhaging. Whether or not Q-Cells’ case is unique remains to be seen.

The Desertec plan, El Nokraschy says, “can be implemented everywhere in the world where there are deserts: USA, China, Australia, India and South Africa, for example. Cables of High Voltage Direct Current (HVDC) of 3,000–4,000km length transporting the electricity at small losses of less than 3% per 1000km, can then supply sustainable and everlasting electricity to more than 90% of the globe’s inhabitants.”

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