On the road down to Rjim Maatoug, on the Tunisian edge of the Sahara, there are shacks where strings of red peppers are hung to dry in the sun, and women bake flatbread on hotplates wherever they think one of the rare cars that passes might stop.

Further north, in Talebt and Kasserine near the Algerian border, there is a booming petrol smuggling industry, and the roads are lined instead with red jerry cans strung up over trees. But by the time you cross the Chott El-Djerid, the eerie salt flat, to Rjim Maatoug, even that basic livelihood is impossible.

It is remote. As Fethi Bel Hadj, a local oil industry engineer, told me as we drove there last year: “in Rjim Maatoug, they receive bread once a week. They are eating bread that is seven days old.”

This, incidentally, is where George Lucas shot the desert scenes from Star Wars, and for a child of the 1980s it is full of the iconography of science fiction, the crimson robes, the wide white sands and red earth burrows. You might think Lucas had an imagination, but when he shot Star Wars he just bought some local clothes from Rjim Maatoug and put short actors in them.

Out in the desert, a couple of miles from an army outpost, is where Nur Energie, a small European energy company, planned to build a solar plant. It was a bare patch of earth, worried at by the wind and held together in stubbly lumps by dry weeds, but on it was going to be one cell in a huge network of solar plants spanning North Africa, using the intense desert sunlight to produce electricity for export to Europe. “Desertec”, a quixotic vision to power the industrial countries of northern Europe, the culmination of a quarter of a century of advocacy, engineering and design, seemed that summer of being on the cusp of finally being realised.

There had been a gradual build-up of momentum over the previous few years. The plan was to put cables across the Mediterranean from North Africa, which receives considerably more consistent sunlight than industrial Europe, and use it to pipe over energy from a dispersed set of independent energy producers, like Nur Energie. A few major investors and businesses had joined working groups and expressed interest in the concept as oil prices rose and European security of energy supply was back in the headlines each time Russia decided to turn off the gas taps in the depths of winter. But it was a disaster that really kicked the stops out from under the wheels.

After tsunami waves hit the Fukushima nuclear plant in Japan, sparking a huge cleanup operation, the German chancellor made a startling announcement—Germany, Europe’s industrial titan, would phase out nuclear power by 2022, starting by immediately shutting down eight reactors. Spain and Switzerland banned new reactor construction. A huge energy gap had opened up and, with most of Europe committed to carbon emissions reduction, the economics of huge renewables projects suddenly looked far more attractive.

Southern Tunisia // Peter Guest

Gerhard Knies, the German physicist who had first proposed the idea of an international solar energy grid in the late 1980s, following the Chernobyl nuclear disaster in the Ukraine, was almost triumphal when I met him and the Desertec Foundation’s director Thiemo Gropp in their office in Hamburg last year.

Move forward 12 months and the picture could hardly be more different. The German industrial giants Siemens and Bosch both pulled out of the project later on that year, and the group’s multi-billion dollar estimates of cost have attracted skepticism from analysts and investors.

Now, in what could be a nail in the coffin for the project, at least in this incarnation, the Foundation run by the idea’s originators has moved to publicly disassociate itself with the consortium of businesses—the Desertec Industrial Initiative—that hoped to actually build it.

In a very strongly-worded press release, the Foundation said that there were “many irresolvable disputes” between the two over their strategic outlook, responsibilities and messaging, “and last but not least the managerial style of DII’s top management.”

The foundation wanted to avoid what it calls “being dragged into the maelstrom of negative publicity about the management crisis and disorientation of the industrial consortium.”

Internal struggles at the DII were toxifying the Desertec name, Gropp tells me. “There was quite a lot of argument going on, not about the Desertec concept but internal conflicts… We had to pull back because the quarrels were so nasty.”

In an emailed response, the DII’s spokesperson Klaus Schmidtke says:

“DII of course respects [the foundation’s] decision; we also believe that this development does not affect the realization of desert power in [Europe and North Africa]. In the past the foundation has had little impact on determining DII’s objectives, strategy or activities. Questions raised about the rights to the “Desertec” name are not effective for our in‐depth, substantive work. We prefer to focus on advancing the idea of desert power.”

The practicalities of the project in its Mediterranean manifestation were already pretty questionable. Much of the investment risk was first evaluated before the Arab Spring, which quite fundamentally changed the countries of North Africa from the kind of predictable quasi-autocracies that rolled out the red carpet for foreign investments, into unstable territories that are difficult to navigate for investors or builders. That makes getting together the money incredibly difficult.

This kind of project tends to be funded by long-term infrastructure investors. They have capital to spend—either their own or that belonging to pension funds, sovereign states or, more rarely, private investors. Infrastructure projects of this type are expensive up front and generate returns slowly over a number of years, or decades, from the revenues of the projects, whether that be fares on toll roads, licence fees on pipelines or tariffs on electricity generation.

For a start, the trunk infrastructure would be incredibly expensive. Although it is narrow, the Med is incredibly deep, and there remain massive technical challenges in just laying the cable. Getting a transmission line, tonne upon tonne of heavy metal, down to the bottom of the 2,000m trenches and then back up on the northern side would strain the capacity of even oil pipeline laying ships. So once the panels are up and running they would first be feeding into the local grid. Those economies were growing—and are again—but that would make any investment a pure domestic infrastructure play in a tumultuous emerging market to begin with. That is quite a lot less attractive.

These in themselves make the project costly and risky. But there is an even bigger problem, which all comes back to a word that is increasingly becoming a profanity in the renewables world: Fracking.

Germany’s nuclear phase-out has not led to quite such a boom in alternatives after all—as the Desertec Foundation’s Gropp says, that was just three months of downhill motion before everything turned around again. Instead, Europe is burning coal—Europe is burning coal because the US is burning gas.

The American shale gas revolution is changing world energy markets. As fracking—hydraulic fracturing, a technique for shaking out gas trapped in rocks—makes natural gas cheap in the US, it has displaced coal in the American energy mix and created a huge oversupply. That, in turn, has meant the price of coal has collapsed and cash-strapped European utilities are burning it. US Energy Information Administration data shows a 23 percent rise in US coal exports to Europe in 2012.

Even gas plants are being mothballed. Statkraft, a Norwegian utility, has idled a gas facility in Germany, and E.ON has said it may do the same on several plants across Europe. Demand in the continent has fallen as industry suffers from the ongoing economic downturn, but regardless, with high oil prices dragging up the price of gas contracts, it is simply cheaper to burn coal.

Europe may well get on the fracking gravy train too. The UK’s rural pastures may hide enough gas to power the country for decades. Eastern Europe, too, could be on the cusp of a new rush.

Gropp has to be an optimist, but he admits that fracking and the new hydrocarbon supplies coming into the market have been disruptive to his organisation’s ideals. Of all of the other major shifts the foundation has witnessed over the past few years, including the Arab Spring, “Shale gas was probably the most harmful,” he says. “It changed the energy world significantly, and will change it for the next 10 years.”

Even so, as he says: “People in our organisation have been fighting for this for 25 years. It has been an uphill battle all the time… I do not expect it will ever be an easy game.”

For the time being there are other options for the foundation in Asia, Latin America and the Middle East—in particular Saudi Arabia, which is investing heavily in renewables. A group in Japan has been talking about a “Gobitech” initiative to take up the slack from Japan’s nuclear shutdown. But the trans-Mediterranean option seems, at least for the time being, off the table.

Speaking with Gropp, it feels as though the grand vision for the project is being made increasingly sclerotic by the persistence and inventiveness of the energy industry in finding new ways to keep getting hydrocarbons out of the ground at a price that makes huge and ambitious renewables initiatives unviable in the short term. The future, as Gropp and Knies see it, is on hold again.

When I spoke with Knies a year ago, he was unequivocal in his distaste for the arguments made by short-termist investors and their advisers. “Economists are the gravediggers of mankind,” he told me. “They would tell us to buy a car without brakes if it is cheaper.”

UPDATE: The DII has now sent back a response, which is incorporated above.