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DESERTEC: Energy in the EU from Northern Africa-a realistic option?

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Barcelona, 26 October 2010

Ladies and Gentlemen,

Thank you for inviting me to the first annual conference of the Desertec Industrial Initiative. What brings us together today lies at the core of the European Union policy in two ways.

First, it is about inventing new energy solutions we all know how crucial this is for our future, especially for security of supply, competitiveness and low-carbon future.

And, second, it is about developing a new industrial partnership together with our neighbours in the Mediterranean. This is why the European Commission welcomes the objectives of the Desertec Initiative and the enthusiasm of all the partner companies coming from the EU and

North Africa. Your consortium managed to gather companies from all the countries concerned in the North and in the South: this is a fundamental condition of success and I trust that DESERTEC will continue to develop in an inclusive and open manner.

Tomorrows energy challenges cannot be met with todays technologies and conventional ways of thinking. Resource efficiency will become one of the main drivers of our economies. We will need to efficiently use every natural resource and to strongly rely on renewable energy sources. In this respect, DESERTEC is apioneering initiative.

The Commission is preparing a strategy to "decarbonise" the energy sector by 2050, which will mention the possibilities to develop large scale renewable energies in the Mediterranean.

But, renewable energy is not only about the environment. Its also about security of supply because renewable energy sources limit our exposure to volatile hydrocarbons supplies. It is thus as strategic for Europe to develop solar power production in the South as it is to develop large wind farms in the North. In addition, action is necessary to achieve competitive prices of renewables. At the same time, the European Union is engaged in a true partnership with the Southern-Mediterranean Countries, notably through our Association Agreements. The socio-economic development of our partners and the interest and support to them so that they develop means to face their own energy challenges in the South is a shared objective. It will require increased amounts of energy over the coming decades. Therefore, an initiative like DESERTEC will succeed if it convincingly meets two conditions:

- First, it benefits our Southern Partners in order to meet their own security of supply this means that part of the electricity needs to be dedicated to the local markets at an affordable price;

- Second, the right choices in terms of industrial investment, technology transfer and employment.

What is the European Union doing to support projects like DESERTEC?

We believe that beyond the first pilot projects large scale investments in the renewable energy sector will only be possible if the right framework conditions are put in place. Several of our partners in the South have started ambitious energy sector reforms and regional market integration is starting to gain momentum. The EU is accompanying these initiatives through its bilateral and regional programmes. Our interventions will continue to focus on setting the right framework conditions for investments in renewable sources.

It is only a few weeks ago that the Commission launched its latest initiative in this field. The technical assistance project "Paving the way to the Mediterranean Solar Plan, will contribute to establish harmonised legislative and regulatory frameworks for renewable, improve knowledge transfer and enhance capacity building.

Conditions for a large-scale roll-out of Concentrated Solar Power (CSP) as a financial viable technology must clearly include the available local and regional grid infrastructure and possibilities for crossing the Mediterranean. Here, major initiatives are underway. Our European financing institutions, including the European Investment Bank and national institutions have become a major source of financing of Mediterranean energy infrastructure. This is a tendency I anticipate will continue and be strengthened, when the EU agrees on a set of energy infrastructure priorities

part of a coherent proposal for an energy policy framework that I shall present next month.

In the European Energy Infrastructure Package the Commission, will focus on strengthening the European grid and the first and fundamental action we have to take to ensure a European and global functioning of the energy market. I think we have to look at the broader picture not only the EUs internal infrastructure. In this way we shall strengthen energy security, diversification. I am convinced that the

policy initiative will have to support renewable energy as a powerful alternative to carbonised fuel. Therefore, we shall already look at the specific financial possibilities for crossing the Mediterranean through super grids to be built mostly after 2020 . When all framework conditions are in place, Concentrated Solar Power in the Southern Mediterranean will, due to the sun radiation intensity, likely be produced for a kilowatt hour price significant below the price of a similar output produced in a Northern European plant. In much of Northern Europe including Germany there is a price margin, which may cater for the transportation expenditure.

This requires feed-in tariffs in place, as a means to bolster the EU medium term energy competitiveness and independence. Today, each member state decide on issues such as feed-in tariffs for renewables, but there is an overriding European perspective and I would be interested to listen to your reflexions as regards possible support schemes at European level. I consider a more harmonised system of national support schemes in Europe to be a good tool in the long run, if it is conceived well. I see this as an important element for the Desertec project to gain momentum. To put it in place, there is still some way to go. I wish to open the debate on this question.

Desertec will undoubtedly benefit from a combination of more bilateral initiatives and industry efforts to decrease the cost difference between Concentrated Solar Power, Photovoltaic and Wind Energy. Or, let me slightly reformulate it: making Concentrated Solar Power gradually, to put it o n a par with oil prices and wind energy. Being an important issue, the EU can assist the process through continued emphasis on framework conditions; but the transformation itself is one that you will have to spearhead!

Important possibilities for commercial transactions do exist, whereby the Southern countries can build "joint projects" and "joint support schemes" with EU partners and which obviously strengthens security of supply by opening-up sustainable import of renewables from neighbouring countries. It is my belief that the Northern European countries, which support Desertec, should more clearly announce their interest in

importing green energy over the long term, including solar energy.

The Commission strategy to "decarbonise" the energy sector by 2050 mentioned earlier will provide the overall policy framework for this.

Ladies and Gentlemen, Let me conclude by repeating that the European Commission shares the objectives of the Desertec Initiative as it was presented to the European Parliament in 2007. We highly welcome the support and the enthusiasm of the private companies from the EU, Middle East and North Africa in creating dynamism and furthering progress in implementing sustainable energy. We should make use of every natural resource that has been given to us - to reach the sustainable energy supply objective: solar, wind, hydro, even wave power in the future.

The Desertec Industrial Initiative is a forward-looking initiative, and private sector financing is definitely key for transformation to a low-carbon future, both in Europe and in North-Africa.

We know that not all the elements required for developing large solar plants in the Southern Mediterranean are at hand today. But we also see very promising pilot projects notably the Ouarzazate project, from which we will all learn and we know that the list of issues to be addressed is limited. In fact, we have started to address them and the European Union will support the work through its assistance and research programmes. I am optimistic that our joint efforts will be fruitful. We have to start concrete efforts now so that Desertec will work in the next 20 years.

It is important to stress again that the Project has to be developed in cooperation with countries of the region on an equal footing; it can not be imposed from the outside.

Action of the regulator and the policymakers at national, European and global level has to go hand in hand with this initiative. We have the ambitious task that Desertec is accepted and promoted not only from the business world but also from the political actors. This is a joint project and without the political will to make it work both in the EU and in Northern Africa, the project cannot fly. I am committed to work towards it together with my partners in Northern Africa, the countries which constitute the extension to the South of the EU next to Spain and Turkey. I will be happy to invite them to Brussels to pursue this dialogue in the next six months. To pursue the same overall goals and have a coordinated approach is vital to permit that both Europe and Northern Africa mutually benefit from each other.

I wish you a successful conference.

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