Future Giant Solar Park in the Sahara

Twelve companies, including top German firms like Siemens, E.ON, Deutsche Bank and Munich Re, have signed a Memorandum of Understanding to turn what sounds like a pipe-dream into reality

With the Desertec Industrial Initiative, the group plan to build an enormous 400 billion Euro solar thermal power plant in northern Africa.

This plant in southern Spain already produces solar thermal power that could be reproduced on a giant scale in the Sahara desert.

Its output would be used locally and in Europe.

While solar thermal is a well-tested technology, it doesn't come cheap, and is still a more expensive source of electricity than fossil fuels.

[Torsten Jeworrek, Desert Industrial Initiative, Munich Re]:
"A rough estimate shows it would cost less than 1000 Euros per European resident. But one thing is certain, the costs of further continued climate change will easily overshadow the costs of financing Desertec."

The project won't happen overnight, but it's hoped Desertec could provide around 15 percent of Europe's electricity by 2050.

It would help the EU meet CO2 reduction targets - and create thousands of jobs.

Europe's been looking at new energy sources for some time. 

The Desertec agreement comes as Turkey and four other nations signed transit agreements for the Nabucco pipeline.

Backed by the EU and the U.S., the pipeline aims to reduce Europe's energy dependence on Russia by transporting gas from the Caspian sea and the Middle East.

Hermann Scheer from the European Association for Renewable Energy says Desertec won't reduce Europe's energy dependency.

[Hermann Scheer, Eurosolar European Association for Renewable Energy]:
"A big problem is the dependency of whole regions of consumers on a few large suppliers. That is a much bigger problem, as it is a daily problem, whether there is instability in the region or not. The main problem which pushes energy prices higher is the large energy suppliers, whether in the petroleum or electricity industry."

Desertec wouldn't be up and running before 2020.

And some critics say Europe should be looking for alternative energy sources closer to home that would available much sooner.