Paul Van Son: Tapping Egypt’s solar power potential

Paul Van Son is the CEO of the Munich-based Desertec Industrial Initiative (Dii), a non-profit foundation that aims at supplying the MENA region and Europe with solar and wind power from the desert.

Dii and Van Son are making plans as far ahead as 2050, and envision generating a large part of MENA’s energy and up to 15 percent of Europe’s energy through wind and solar energies, with a special focus on solar power and the planned installation of thermal solar power plants in Morocco, Tunisia, Egypt and possibly Algeria.

Paul Van Son is wrapping up a two-day visit to Cairo, during which he met with Minister of Electricity Hassan Yunis and officials from the Ministry of Trade and Industry. His aim was to explain Dii’s vision, which includes the creation of a partnership that will make the most of Egypt’s fantastic solar resources in the coming years.

Although Egypt’s solar project is still quite modest and at an early stage of development, Van Son felt a “sense of urgency” while discussing the matter with the various authorities.

Al-Masry Al-Youm: How do you understand this post-revolution sense of urgency, as you put it, with regard to renewable energies in Egypt?

Paul Van Son: I made a first visit to Egypt about a year ago to present the Desertec vision, and the sense of urgency was not there. This year, I have the feeling that it has been understood that the only viable sources of energy left are renewable energies from wind farms and solar power plants.

Today, the different ministries concerned with energy and the Egyptian companies are aware of the fact that fossil fuel is dwindling and realize the necessity for Egypt to increasingly import oil and gas. Egypt also realizes that nuclear power is not so easy to implement. If they insist on developing a nuclear program, it will be very difficult to finance because of insurance and security costs, which are skyrocketing.

So there is only one option left, and this is renewable energy. Wind first, which is a very cheap source of energy, and then solar. We are focusing mainly on the latter because that’s the type of energy where the cost should be really reduced. The cost of solar at the moment is too high, and in order to bring it to the market we have to make a big effort in getting projects up and running, because once these kinds of projects develop you will see a trend in the market, and the cost will eventually go down.

Al-Masry: You are actually discussing long-term plans to create solar power plants with a transitional government. Don’t you have the feeling that you will have to discuss them again with the next elected government?

Van Son: I don’t mind having discussions over and over. For us it is important to trace how the perception of our initiative develops even with an interim government. This type of interaction leads to more creative type of discussions. It helps us to understand how comprehensive Egypt’s solar energy plans could be, compared to Tunisia and Morocco, and also how Egypt can help us to work with the European Commission and European member states to get financial aid.

Al-Masry: What does Egypt’s solar project look like, and does it have a good chance of developing?

Van Son: For now, Egypt’s solar project is rather modest, and it is important to remember that we are still at the very beginning stage. But the potential of the country in solar energy production is immense. For the first 10 to 15 years, Egypt will need outside help as subsidies or encouragement to start off, but there are so many favorable sites that we can develop. We are looking for sites in the desert that have good irradiation conditions while being located close to the necessary infrastructure like electrical grids. Our focus is not only on power generation, it is also connected to the electrical grids and connections to outside of the country. The link to Europe from Egypt would probably go through Jordan, Syria, and Turkey.

Al-Masry: Do you have the feeling that the Egyptian government is willing to create policies facilitating the building of thermal solar power plants in Egypt?

Van Son: There is no other way. When you are aware of the urgency, you have to act, otherwise you shift the problems to the future. What Hassan Younis mentioned today concerning policies is that taxes on renewable equipment were abolished two weeks ago, and he will present to the prime minister next week in front of the Supreme Energy Council a ministerial decree offering land free of charge for renewable energy projects and offering a preferential rate for buying renewable energy and offering sovereign guarantees [central bank guarantees] for anyone who invests in renewable energy. So already the policy is on the move.

Al-Masry: What would be the cost of such a mega project in Egypt?

Van Son: At this moment, we do not have a precise idea of this. We are in a very initial state and our role is only to facilitate the process, to bring parties together on the basis of a feasible project. What we do is to drive as many projects as possible so that in the next 10 to 15 years renewable energies will be competitive on the market and not be subsidized anymore. Between 2020 and 2030, we expect the industry to become a booming business.

Al-Masry: What proportion of the energy created by alternative sources would be generated for local consumption, and what percentage would be for export to Europe?

Van Son: The most important thing is that local markets will be served with sustainable energy as much as needed. Why should markets export if they have a lack of energy themselves? But it is hard to give you precise percentages because it will be linked to the financing of the project. If in the first 10 to 15 years the cost is so high that the sponsoring side will have specific requirements of importing, then Egypt will have to comply with it. But in general terms, the Desertec initiative should be beneficial for both parties, the country which owns the energy and the country that is developing the project.

Al-Masry: How have the various governments of MENA countries reacted to the Desertec vision? Is there anxiety that there might be foreign control over their national resources?

Van Son: Yes, about a year ago this feeling was definitely present; it had to do with the way the Desertec project was announced to the press in the beginning. It was presented as the big solution to all problems, with a heavy component of export to Europe. And of course, governments in the region were saying that they had never been asked in the first place and were wondering why all their energy should be exported to Europe.

We rectified these statements and explained that it was a communication mistake. The priority is their energy, and if they don’t use it, it disappears. So it is up to the countries to decide whether they want to use it and export it. One-and-a-half year ago these countries felt some reluctance because of the misunderstanding, because of the communication, but today they are all convinced that it is a good idea to invest a bit of their oil money into solar to create a basis for the next generation.

Al-Masry: Will the integration of the MENA countries in a global energy market become a factor for stability and peace in the region?

Van Son: By definition, if you create jobs and sustainable energy, then you improve the climate and bring in expertise so that these countries can become more independent. They can also create added value for export. That, by definition, would create an atmosphere of stability.

Al-Masry: The Dii second annual conference will take place in Egypt in November 2011, so what made you choose Egypt over other countries in the region?

Van Son: Because Egypt occupies a very central location in the MENA region, and is its biggest economy. It is also a country that is open to interactions with Europe and has a strong scientific base.

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