Financing concentrating solar power in the Middle East and North Africa—Subsidy or investment?

The paper presents a strategy for the market introduction of concentrating solar power (CSP) plants in the Middle East and North Africa (MENA) that will not require considerable subsidization and will not constitute a significant burden for electricity consumers in the region. In the first section, the paper explains the need of MENA countries for sustainable supply of electricity and calculates the cost of electricity for a model case country. In the second part, the cost development of concentrating solar power plants is calculated on the basis of expectations for the expansion of CSP on a global level. After that, the challenges for the market introduction of CSP in MENA are explained. Finally, we present a strategy for the market introduction of CSP in MENA, removing the main barriers for financing and starting market introduction in the peak load and the medium load segment of power supply. The paper explains why long-term power purchase agreements (PPA) for CSP should be calculated on the basis of avoided costs, starting in the peak load segment. Such PPA are not yet available, the paper aims to convince policy makers to introduce them.

Research Highlights► Concentrating Solar Power in the Mediterranean Region (MED-CSP 2005) www.dlr.de/tt/med-csp. ► Trans-Mediterranean Interconnection for Concentrating Solar Power (TRANS-CSP 2006) www.dlr.de/tt/trans-csp. ► Concentrating Solar Power for Seawater Desalination (AQUA-CSP 2007) www.dlr.de/tt/aqua-csp. ► Risk of Energy Availability: Common Corridors for Europe Supply Security (REACCESS 2009) http://reaccess.epu.ntua.gr/. ► Combined Solar Power and Desalination in the Mediterranean (MED-CSD 2010) www.med-csd-ec.eu.