BERLIN (Bloomberg) -- Siemens AG, Munich Re and 10 more companies plan to draw up blueprints for their project to harness the sun that beats down on the Sahara Desert to bring extra electricity to European homes.

Years of designing lie ahead before the mostly German promoters can then start addressing financial and political hurdles for a venture that may require about $555 billion in investments, said Siemens spokesman Alfons Benzinger. He spoke in an interview before the companies meet on Monday in Munich to sign a memorandum of understanding to proceed.
Siemens, Germany’s largest engineering company, will try to prove the Desertec project is cost-effective, utilizing a free energy source from the sun to pipe power in cables under the Mediterranean Sea to provide 15 percent of Europe’s electrical needs by mid-century. The spending may help spur economic growth in Algeria and Morocco.
Nine of the companies in Desertec are German and three aren’t, said Alexander Moranti, a spokesman for Munich Re. There’s “an insane amount of interest” in the project from other companies, including some in the Middle East that he declined to identify. The project, which may be extended east to Saudi Arabia, will eventually evolve into an “open and international” group of participants, he said.
Potential hurdles include setting up the legal framework in North African countries and the European Union and finding willing investors.
“It’s a fantasy to think that we’ll be shipping electricity from the Sahara to Germany,” said Fritz Vahrenholt, head of the Innogy renewable-power unit of German utility RWE AG in Berlin. “We need details,” said Vahrenholt, skeptical that the project will achieve its full size.
--------------Aerospace origins
The plans so far are based on scientific studies by the German DLR aerospace center that RWE and others spent less than 1 million euros ($1.4 million) to fund, Vahrenholt added.
The project will require high-voltage cables to move power from sparsely populated areas of North Africa under the Mediterranean to Europe, whose transmission grids already are struggling to accommodate power increasingly supplied by new solar and wind farms.
Siemens, based in Munich, and partners are considering installing solar-thermal systems that heat a fluid by concentrating the sun’s rays onto a tube. The liquid then produces steam that turns turbines. The world’s largest solar- thermal system is in California’s Mojave Desert.
Costs would fall as the project gets larger, helping to lower the price of electricity, said Siemens’ Benzinger, who pointed to the declining price of electricity generated from wind turbines as a possible model. Over the past 20 years, the cost of 1 megawatt of electricity from wind power has fallen from 3 million euros to 1 million euros, he said.