Environmental Engineering Reference
In-Depth Information
purpose and idea of an investment because no host state would purposely accept a
project which needed public financial aid.
This might already exclude the requirement of contribution to the economic
development, which means that the Desertec Concept is something completely new
in the field of investment law. This is a particular problem in Morocco because the
price of solar thermal energy is twice as high as the average price.
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Without these
subsidies, there is only a small chance that solar thermal energy could be compet-
itive. If Morocco/ONE agree to buy the produced energy (e.g. PPA), they will have
an obligation to purchase. This may be a problem for both parties, especially at the
beginning of the Desertec Concept. Since there are no transmission lines between
MENA countries and Europe at the moment, an investor cannot export the energy.
Hence, an investor must focus at first on the MENA region. The same problem
arises for the economy and export. The domestic economy must also pay higher
prices, which leads to increasing production costs and consequently to more
expensive products, which are difficult to sell and export. In addition, the solar
thermal energy price is also considered to be expensive in other countries. These
countries also need to subsidize the energy to make it compatible. This is another
example of how Morocco depends on external factors, creating a vicious circle. If
Morocco does not subsidize the energy, it will harm its own economy and if it does
subsidize it, it creates a burden on its public finance. In both cases, it is difficult to
talk about a contribution to the economic development of the host state if there is
nothing left of the concession fee.
One possible solution to the problem would be if third countries supported the
implementation of the Desertec Concept. As mentioned above, Morocco and the
EU have a lot of cooperation agreements which might offer additional financial aid.
The EU has a lot of programs devoted to assist developing countries and supports
external ones as well, e.g. the UM. Once it is up and running, it could financially
assist MENA countries. Therewith, a combination of these tools might offer a way
to subsidize the Desertec Concept within the first years. Morocco also applied for
funds of the UNFCCC and cooperates closely with the World Bank, as mentioned
above. Furthermore, most European actors have declared that they are willing to
support the Desertec Concept. Different parts of the World Bank have also showed
their support for clean technology and the Desertec Foundation and the newly
founded Desertec University Network could be helping to make the project public
and create additional support. External financing would help to relieve the Moroc-
can finances and thus turn the Desertec Concept into a contribution for the host
state. Nevertheless, it is difficult to predict how the project will develop and
whether all the third parties will keep their financial aid promises. Recent negoti-
ations concerning a follow-up protocol for Kyoto have illustrated again that there is
a difference between making and keeping a promise.
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Since Morocco has the highest energy prices at the moment within the MENA region, costs in
other MENA countries would be even higher.
