GIANT SUN GETS INSURER

Munich Re may insure Desertec solar energy project
George Frey, September 7, 2009 (AP via Forbes)

"German reinsurer Munich Re AG said its main role in the proposed Desertec solar energy project is currently as a catalyst and advisor, but could become a bigger investor and possible insurer…

"Desertec, still on the drawing board, aims to produce solar-generated electricity for much of Europe, Africa and the Middle East in coming years through a vast network of generating facilities and transmission grids across North Africa and the Middle East…"

While new nuclear and "clean" coal plants can't get insurers without government liability protections, staid and conservative Munich Re is willing to back this audacious and ambitious plan. What does that say? (click to enlarge)

"The three-year project phase will focus on creating the regulatory framework and developing a detailed rollout plan to allow stakeholders, including governments, to evaluate their possible involvement and investment. The next step in Desertec will be to legally incorporate [on October 31]...

"Over the summer, a consortium of 12 European companies announced plans to build the project in North Africa and the Middle East which they said could satisfy 15 percent of Europe's energy needs by 2050…The Desertec consortium also includes Deutsche Bank AG…German industrial conglomerate Siemens AG…and the German power companies RWE AG and E.ON…"

More details about the plan. (click to enlarge)

"The project would be based largely on solar power plants, which use mirrors to focus the sun's energy to heat liquid and power turbines. Such plants are already running in the U.S., Spain and elsewhere…[It is] still far from being realized though, given the enormous cost and funding necessary to build the project alone - while generation and transmission will also come at no small cost…[and there are other risks] like potential political instability or even terrorism threats in the region, while some environmentalists say Europe would be better served sticking to smaller-scale solar facilities at home.

"The German Aerospace Center estimates the new electricity transport network alone will cost some euro45 billion ($63 billion), while the group forecast the entire project could approach some euro400 billion…The Desertec consortium said it had already started discussing the project with governments in Europe and Africa, though wasn't specific as to which ones. Morocco, for example, has already expressed interest…[Munich Re] said it was still too early to say how equity investors might join the project, if it gets built…"