MED-CSPMED-CSP

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

MED-CSPMED-CSPSocio-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.

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Technology Learning Curves: CSP is not an Exception

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Cost Learning Curves of CSP Components

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MED-CSPMED-CSPSpecific Investment of Power Technologies

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Spec. Invest. $/kW 2000 2010 2020 2030 2040 2050Wind 1550 1280 950 930 920 900Photovoltaics 5500 2830 1590 1250 1010 910Geothermal 11714 4530 3249 2791 2700 2654Biomass 2500 2000 1700 1670 1660 1650CSP Plants 3098 3388 4662 4332 4185 4134Wave / Tidal 3000 2500 2250 2100 2050 2000Hydropower 1800 1800 1800 1800 1800 1800Oil / Gas 550 540 530 520 510 500Coal 1150 1150 1150 1150 1150 1150

increased solar share

MED-CSPMED-CSPElectricity Cost of Power Technologies (Example)

Egypt

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Hydropower

CSP Plants

Oil / Gas

Coal

Discount Rate 5 %2000-$

LEC New Plants c/kWh 2000 2010 2020 2030 2040 2050Wind 6.2 5.2 3.8 3.7 3.7 3.6Photovoltaics 31.9 14.7 7.4 5.8 4.6 4.2Geothermal 19.1 7.4 5.3 4.5 4.4 4.3Biomass 7.6 6.2 5.4 5.3 5.2 5.2CSP Plants 7.9 7.1 5.2 4.5 4.1 4.0Wave / Tidal 0.0 0.0 0.0 0.0 0.0 0.0Hydropower 2.9 3.0 3.1 3.1 3.2 3.3Oil / Gas 5.4 5.8 6.2 6.7 7.2 7.8Coal 4.0 4.2 4.5 4.8 5.1 5.5

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MED-CSP Present/DLR 2004/ /oilnergy.com/Fuel Cost (2000) Fuel Cost (2004)

Crude Oil 25.0 $/bbl 15.1 $/MWh 36.0 $/bbl 21.7 $/MWhHeavy Fuel Oil 184 $/t 15.1 $/MWh 270 $/t 22.1 $/MWhNatural Gas 4.2 $/GJ 15.1 $/MWh 6.0 $/GJ 21.6 $/MWhCoal 49.0 $/t 6.0 $/MWh 55.0 $/t 6.8 $/MWh

General Parameters used for the Scenario Calculationsand Example for Typical Electricity Costs in the Starting Phase

Discount Rate 5.0% real

ST Coal ST Oil CC NG Wind CSP Hydro Geothermal BiomassInsurance 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%O&M 3.5% 2.5% 2.5% 1.5% 3.0% 3.0% 4.0% 3.5%Flh 5000 5000 5000 2000 8000 2600 7500 3700

$/kW c/kWh Life/y Effic. Fuel Esc.ST Coal 1150 4.5 40 40% 1.0%ST Oil 850 6.7 30 40% 1.0%CC NG 550 5.3 30 48% 1.0%Wind 1280 7.4 15CSP 3100 8.2 40 37% 1.0%Hydro 1800 6.2 50Geothermal 4350 6.4 30 13.5%Biomass 2000 8.2 30 35% 0.0%

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Cost of Electricity from Coal, Gas & Nuclear Energy

ct/k

Wh

cost of CO2-Sequestration

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

Crude Oils

Natural Gas

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Solar vs. Fossil Energy Costs during Market Introductionwith Varying Return on Investment and Fuel Escalation

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Installed Capacity in MW and 1000 m³/d

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fossil fuel cost: escalation rates from 0.4 to 1.2 %/y

equivalent solar energy cost: return on investment from 6 to 12 %/y

Start: 2006 205020202015

Source:IEAMED-CSP

possible from today’s perspective

IEA scenario

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b) Municipal Sector

The present status of water pricing in the MENA Region /Saghir 2003/

a) Irrigation Sector

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Average Production Cost

Average Price

Source: SARs and BORs. The World Bank

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Average Price

Source: SARs and BORs. The World Bank

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Average Price

Source: SARs and BORs. The World Bank

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Source: SARs and BORs. The World Bank

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Parameter Heat Electricity Steam Tempe-rature

Cost Product Water Quality

Unit kWh/m³ kWh/m³ °C $/m³ ppm

Multi-Stage-Flash Distillation

25-80 3-5 90-120 0.7-1.8 < 50

Multi-Effect Distillation 25-80 1-2 55-120 0.3-1.5 < 50

Reverse Osmosis - 3-10 - 0.3-1.5 300-500

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

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Cost of Water desalted by CSP in Cogeneration with MED for 4, 9 and 14% Rate of Return, Electricity Cost 4 ct/kWh

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Cost Range of City Water in MENA

Cost Range in Selected Remote Regions

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Cost of Electricity by CSP in Cogeneration with MED for 4, 9 and 14% Rate of Return, Water Cost 0.50 $/m³

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Base Load

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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

MED-CSPMED-CSPPopulation density in persons/km² in the EU-MENA Region

Source: LandScan 2004

MED-CSPMED-CSP Satellite View of the EU-MENA Region at Night

MED-CSPMED-CSP

Projection of a future Trans-Mediterranean Grid interconnecting the Best Sites for Renewable Energy Use in EU-MENA

Solar

Wind

Hydro

Geothermal

EURO-MED

possible further inter-connections

Biomass

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Population density in persons/km² in the Middle East

Source: LandScan 2004

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Population density in persons/km² in Maghreb and Southern Europe

Source: LandScan 2004