Within 6 hours deserts receive more energy from the sun
than humankind consumes within a year.
________________________________Prompted from the previous post about Dubai, today's post is about a quiet revolution planned for the deserts of North Africa. It's called DESERTEC and it's a pretty simple concept: harvest the massive amounts of solar energy in that region, turn it into electricity and send it across to Europe via cable.
The basic technology is quite old and proven: Concentrated Solar Thermal Power (CSP), i.e. using mirrors to concentrate sunlight, generate steam and thus drive turbines and electrical generators. The crucial difference between this and direct conversion of sunlight into electricity via photovoltaic panels, is that heat can be stored in media exhibiting high heat capacity (e.g. salts) and used to generate electricity 24/7, even when there is no sunlight. In addition, waste heat (i.e. lower enthalpy steam) can be used to desalinate water or drive cooling systems.
If you think that this sounds a bit like "pie from the sky" (sic), think again: a few days ago twelve of the world's largest companies signed on to the project, including the likes of Siemens, ABB, RWE, E.ON, MAN, Munich Re, Deutsche Bank and ABENGOA, bringing the project one step closer to becoming reality. The thumb-prints of Germany are all over this consortium, as one would expect from the largest EU member that is also forward-looking and firmly committed to alternative energy and infrastructure transformation.
This type of massive, game-changing project rings a huge wake-up bell: the days of debt-fuelled consumer spending growth are over. The economic paradigm for the next hundred years will be based on huge infrastructure spending, to radically transform energy sourcing, generation, transmission, storage and utilization.
Please keep this simple maxim in mind:
- Energy is the biggest business of them all, by a long shot.
I am hopeful that after wasting resources* on financial bailouts (perhaps a necessary evil), our societies will see the light and now shift to productive and responsible courses of action.
* (Well.. it's only fiat money, actually, so the damage is mostly limited to the public's perception of policy priorities, i.e. propaganda. But such perception makes a big difference to the success or failure of necessary initiatives.)
What does this mean for investors with longer-term horizons?
- Avoid the consumer non-essential sectors. By definition, societies will have to save more in order to finance these projects and will thus have less to spend on non-essentials.
- Avoid the consumer finance sector, for the same reason.
- Interest rates will have to rise from near zero, to induce savings.
- Grid-related technologies will become increasingly important.
- Let Gaddafi pitch his tent where he wants (smile).