Brussels, 11/05/2010 (Agence Europe) - The European Investment Bank (EIB) held an expert forum on the development of renewable energy in the Euro-Mediterranean area, including the “solar plan”, one of the six flagship projects of the Union for the Mediterranean (UfM) in Valencia on Monday 10 May. At the conference, it announced that, in June, it would make public an assessment report on the projects submitted by various public and private promoters to allow it to make a judgment on their stage of readiness and to decide whether to back them financially and/or help mobilise investors. The report, conducted by independent consultants Montgomery Watson Harza (MWH), in cooperation with Bank experts, will pave the way for a wide-ranging debate which will go beyond Euro-Mediterranean cooperation and will include applicant countries and make reference to the national plans of Mediterranean member states. Opening discussions, the Spanish secretary of state said that the issue of funding was a “key factor” to be added to the technical objections and would encourage both promotion of new, alternative generation and savings in the energy currently being used. On behalf of the French part of the joint UfM Presidency, Antoine-Tristan Mocilnikar painted a full picture on the mobilisation of various financing bodies and the identification, at this stage, of 150 projects which bring the promise of 150,000 jobs.
The report, announced on the eve of the ministerial meeting, also in Valencia, provides analysis of the main economic effects of the development of the projects (scale of investment, need for subsidies and the extent to which private sources will be involved), the availability of funding resulting from “carbon credits” (to encourage the reduction of CO2 emissions), the crucial issue of the cost of renewable energy and of its introduction, the need to develop a transport infrastructure - interconnections - and the technical, financial and regulatory obstacles with which the “solar plan” already appears to be confronted. It would appear that a review is taking place, shifting the focus from solar power towards renewable energies as a whole, with wind power appearing now to be finding favour. This view is the one taken by the European Commission. As things stand, said Philippe de Fontaine Vive, Vice-President of the EIB, forecasts of financial needs have doubled to €46 billion. Furthermore, projects which have been identified as being at an advanced stage would only generate some 2.1 GW of energy, one tenth of what was initially hoped for by 2020 (10 GW for all the projects under scrutiny but not yet approved).
The informed debate among experts did not really allow for a decision to be taken on whether solar power can be the energy for the near future, perhaps to meet temporary increased demand. “The readiness of projects is related to the state of advancement of the underlying technologies,” said Grammatiki Tsingou, Director General of the Projects Directorate at the EIB, who presented the report. Wind energy provides 1.6 GW of the 2.1 GW of projected capacity; solar power accounts for 87% of the projects which still have some way to go to be convincing. The difficulties would appear to be storage, consistency of generation levels and transport given the few connections that exist. The debate highlighted, too, that it is not just the southern rim which faces this problem. European interconnections are still insufficient, several speakers said, with the Spanish electricity grid mainly responsible.
The report will provide a number of scenarios, a “low-level” vision where no more than 4.9 GW would be generated from renewable sources by 2020, and a “high-level” vision, where all the projects come to fruition, though only realising 53% of the Euro-Mediterranean plan targets (19% in the more pessimistic scenario). The inclusion of Turkey will improve matters, but the Bank has no intention of conceding and, through the FEMIP (Facility for Euro-Mediterranean Investment and Partnership), will boost electricity generation from renewable sources taking it from 0.5% in 2008 to more than 3% and, it hopes, to 8.9% by 2020. Cooperation will be sought with major financial and technical players, especially “Masdar Power” a large-scale city of the future project in the United Arab Emirates, the director of which, Frank Woulters, was present in Valencia. The most frequently cited area and one which the EIB intends to promote in the Euro-Mediterranean area, is improving energy efficiency. Urban development must be linked to these efforts. Another requirement which came back time and again in the intense debate was for a legal and regulatory framework which promotes development of renewable energy.
The report, extended to all forms of renewable energy, and with its chapters on the Euro-Mediterranean area already completed, will, by next month, include assessments of similar projects in Turkey, which will be dealt with separately because of its being a candidate country for EU accession and the specific nature of its projected energy demand. The report will also cover the Balkans. The Euro-Mediterranean approach will be to link in with the putting in place of a Community renewable energy development strategy, with member states having to submit to Brussels their views on how to proceed by the end of June. The Commission will then decide on the scale of cooperation with third countries, said Fabrizio Barbaso Deputy Director General if DG Energy at the European Commission, said after the forum. It is the EU Mediterranean member states, in particular Italy, which intend to give an external dimension to their national plans. The prospect of connecting the two shores of the Mediterranean raises the issue, raised several times during discussions, of the cost of the energy exported to the EU. De Fontaine Vive called for no conclusions to be drawn, especially since the European Commission itself points out that, as things stand, the projected power generated by Mediterranean third countries is targeted at local markets. The prospect will “bring a raft of projects” and, ultimately, lead to a reduction in costs and, he advised, it would be in the interests of European investors “to be among the first”.
De Fontaine Vive said that “it is within our grasp (but) we have to redouble our efforts”, noting that solar power remained a long-term vision which would certainly incur heavy start-up costs but would be viable in the long-term. He argued that public authorities had to become involved. He assessed prior subsidy needs at some €1.3 billion and pointed out that the European Parliament had still to decide, this year, on the new financial perspectives for third countries. Barbaso said that “there is no solution that suits everyone, situations alter from one country to another”, highlighting the case of countries which continue to subsidise gas, which discourages development of renewable energy. This is the case for Algeria and, to a lesser extent, Egypt. Algerian delegates in Valencia contented themselves with discreetly observing discussions, maintaining a low profile on what the EIB was saying since their country “has adopted a position where it does not accept external funding,” the vice-president said. Barbaso suggested it would help them if they shifted subsidy of gas to renewables. Algeria, like all the Arab countries, is involved in putting in place an “Arab strategy” for renewable energy, details of which were unveiled at the forum by Salha Abusaba, Head of the Renewable Energy Department in the Arab League. She said that the Arab countries were planning to offer renewable energy to the European market at a “preferential price”, a comment of which Barbaso made careful note. (F.B./transl.rt)