In the last year, I have been thinking about adding some more risk into my very own portfolio in the form of African companies. Investing in Africa could very well be considered as socially responsible investments in itself. It would be even more interesting, if I could bet on both alternative energies and Africa at the same time.
Some of the most interesting green bets in Africa are those connected with the Desertec plan. According to the plans, it could be possible to import as much as 15 % of the electricity required in Europe from the Saharan power plants by 2050.
Desertec is centered on plans to build huge solar power plants for producing electricity in the Saharan desert. The plants would be concentrated solar power plants (CSP) instead of the photovoltaic technology. CSP plants use hundreds of mirrors for concentrating the sun’s heat. The heat is then used to heat water to drive a turbine in the same way as traditional thermal power plants.
At the moment, I see three problems in investing in Desertec. First of all, most of the companies involved in the project are major European players in energy, finance and technology which have a very diversified project portfolio.
Because of this, an investment in companies like Deutsche Bank, Munich Re and Siemens can only marginally be considered as green investments. Moreover, I would like to invest in African companies — not in European companies inbesting in Africa. On the other hand, the investments in these companies would not be as volatile as North African stocks would be.
Another problem is caused by the very long time span of the project: it will take decades before the solar plants produce electricity to be imported in Europe. An investment horizon of several decades is probably too long for most of the investors, even for those who consider themselves green investors.