Vattenfall Speaks Out Against Desertec

Last Updated Jul 16, 2009 8:33 AM EDT

Desertec, a project to link Europe's power grid to Africa, has been in the news quite often lately, and for good reason. It offers a compelling image: A vast, high-tech network of transmission lines branching out across Europe, with its roots drawing energy from solar power plants in the sunny deserts of northern Africa. The network would aim to supply up to 15 percent of Europe's energy needs.

It's the sort of ambitious thinking that we're often told we need to solve global warming. But if that's the case, why is one of Europe's biggest electrical utilities, and one of the early leaders in cutting emissions, opposing the plan?

The company is Vattenfall, and its lack of enthusiasm for Desertec could prove quite damaging, given its influence with government. Lars Josefsson, Vattenfall's CEO, has been speaking out in European media against the project, citing reasons including complexity, risk of terrorism and, most importantly, price. First estimates show Desertec costing about $400 billion.

Costs from transmission loss of electricity would also factor in, according to Josefsson, who favors modernized coal power (Der Spiegel has more on all this, but the article is in German). He advocates keeping whatever power production Europe relies on within its borders -- a message that may resonate following difficulties getting natural gas from Russia.

And some of Josefsson's points are pretty good. Desertec seems to be at least partially predicated on suspiciously low estimates for the cost of electricity from the power plants in northern Africa. Another publication cited by Der Spiegel, a magazine called Photon, suggests that the power could cost only six cents per kilowatt-hour. Most of the companies working on solar thermal technology, the type that would be used, are still working to get below 10 cents per kWh, and there are practical limits that make getting the cost much lower very difficult.

Will Vattenfall alone be enough to stop Desertec? Probably not. Another big utility, E.on, is part of the consortium pushing the European Union to take up Desertec, along with a lineup of industry giants including Deutsche Bank, Siemens and the insurer Munich Re. If Vattenfall stands up alone, it may be that all Josefsson gets for his efforts is a damaged reputation.

But if any lesson has been learned from other proposed mega-projects, it's that massive ambition typically goes hand in hand with unexpectedly massive costs. Desertec may indeed be a good idea for Europe, but before diving in, the EU would do well to take a good look at exactly what it's getting into.