E.ON to walk away from Desertec

E.ON at the end of this year will leave the Desertec Industrial Initiative (DII), diminishing further the influence of German companies which for a long period dominated the Munich-based group.

“Our co-operation contract with Desertec will run out at the end of the year, and we won’t extend it,” E.ON press official Georg Opperman told Recharge.

E.ON was one of the founding members of DII in 2009, together with several other German companies such as insurance giant Munich RE, fellow utility RWE, and industrial powerhouses Siemens and Bosch.

Siemens and Bosch have since left DII as well after giving up their solar businesses, although the initiative – which seeks to spur renewable developments in desert regions, mostly in North Africa and the Middle East – is also contemplating large wind power projects.

Amid financial difficulties E.ON now wants to concentrate on its own renewables projects, and is in the middle of a cost-cutting programme.

After internal management disputes last autumn, DII said it planned to transform from a "temporary project initiative" to a permanent organisation. Initial contracts will run out at the end of 2014, which could prompt further companies to reflect over their presence in the group.

According to German media reports, companies such as HSH Nordbank also plan to leave the initiative, while other businesses such as Deutsche Bank and RWE reportedly plan to stay.

The group also recently gained a powerful new member, the State Grid Corporation of China, which should further propel the initiative away from its original cluster of German companies.

“During the past five years, DII clearly has become more international,” DII spokesman Klaus Schmidtke told Recharge. “But German companies still play a big role."

While initially geared towards the idea of exporting renewable energy from the MENA region to Europe to diversify the continent’s energy supply, DII increasingly stresses the need for countries in the region to use renewables to meet their own soaring energy needs.

In part that is because pilot plans to export RE from Morocco to Europe never took off, due to the need for massive grid-interconnection upgrades and wavering support from crisis-struck Southern European countries such as Spain.

But it also reflects the fact that MENA countries are increasingly embracing RE for their own use and via their own programmes, such as renewables frontrunner Morocco that currently is developing several large solar arrays.

DII last summer published a study saying MENA countries plan to build up to 50GW of wind, PV and concentrating solar power (CSP) projects by 2020, while assessing the region’s potential for wind and solar at more than 800GW.