The following correction was printed in the Observer's For the record column, Sunday December 9 2007

In the article below we said the electricity generating capacity for Britain totalled 12 billion watts. The actual figure is closer to the 74 billion watts, generated annually by the UK's power stations. Additionally, the photograph accompanying this article shows solar panels used in Munich that employ a technology unrelated to the concentrated solar power technology discussed in this article.

Europe is considering plans to spend more than £5bn on a string of giant solar power stations along the Mediterranean desert shores of northern Africa and the Middle East.

More than a hundred of the generators, each fitted with thousands of huge mirrors, would generate electricity to be transmitted by undersea cable to Europe and then distributed across the continent to European Union member nations, including Britain.

Billions of watts of power could be generated this way, enough to provide Europe with a sixth of its electricity needs and to allow it to make significant cuts in its carbon emissions. At the same time, the stations would be used as desalination plants to provide desert countries with desperately needed supplies of fresh water.

Last week Prince Hassan bin Talal of Jordan presented details of the scheme - named Desertec - to the European Parliament. 'Countries with deserts, countries with high energy demand, and countries with technology competence must co-operate,' he told MEPs.

The project has been developed by the Trans-Mediterranean Renewable Energy Corporation and is supported by engineers and politicians in Europe as well as Morocco, Algeria, Libya, Jordan and other nations in the Middle East and Africa.

Europe would provide initial funds for developing the solar technology that will be needed to run plants as well as money for constructing prototype stations. After that, banks and financial institutions, as well as national governments, would take over the construction programme, which could cost more than £200bn over the next 30 years.

'We don't make enough use of deserts,' said physicist Gerhard Knies, co-founder of the scheme. 'The sun beats down on them mercilessly during the day and heats the ground to tremendous temperatures. Then at night that heat is radiated back into the atmosphere. In other words, it is completely wasted. We need to stop that waste and exploit the vast amounts of energy that the sun beams down to us.'

Scientists estimate that sunlight could provide 10,000 times the amount of energy needed to fulfil humanity's current energy needs. Transforming that solar radiation into a form to be exploited by humanity is difficult, however.

One solution proposed by the scheme's engineers is to use large areas of land on which to construct their solar plants. In Europe, land is costly. But in nations such as Morocco, Algeria, and Libya it is cheap, mainly because they are scorched by the sun. The project aims to exploit that cheap land by use of a technique known as 'concentrating solar power'.

A CSP station consists of banks of several hundred giant mirrors that cover large areas of land, around a square kilometre. Each mirror's position can be carefully controlled to focus the sun's rays onto a central metal pillar that is filled with water. Prototype stations using this technique have already been tested in Spain and Algeria.

Once the sun's rays are focused on the pillar, temperatures inside start to soar to 800C. The water inside the pillar is vaporised into superhot steam which is channelled off and used to drive turbines which in turn generate electricity. 'It is proven technology,' added Knies. 'We have shown it works in our test plants.'

Only small stations have been tested, but soon plants capable of generating 100 megawatts of power could be built, enough to provide the needs of a town. The Desertec project envisages a ring of a thousand of these stations being built along the coast of northern Africa and round into the Mediterranean coast of the Middle East. In this way up to 100 billion watts of power could be generated: two thirds of it would be kept for local needs, the rest - around 30 billion watts - would be exported to Europe.

An idea of how much power this represents is revealed through Britain's electricity generating capacity, which totals 12 billion watts.

But there is an added twist to the system. The superheated steam, after it has driven the plant's turbines, would then be piped through tanks of sea water which would boil and evaporate. Steam from the sea water would piped away and condensed and stored as fresh water.

'Essentially you get electricity and fresh water,' said Knies. 'The latter is going to be crucial for developing countries round the southern Mediterranean and in north Africa. Their populations are rising rapidly, but they have limited supplies of fresh water. Our solar power plants will not only generate electricity that they can sell to Europe, they will supply drinkable water that will sustain their thirsty populations.'

There are drawbacks, however. At present electricity generated this way would cost around 15-20 eurocents (11 to 14p) a kilowatt-hour - almost twice the cost of power generated by coal. At such prices, few nations would be tempted to switch to solar. 'Unless it is extremely cheap, it won't stop people using easy-to-get fossil fuels,' John Gibbins, an energy engineer at Imperial College London, told Nature magazine last week.

However, Desertec's backers say improvements over the next decade should bring the cost of power from its plants to less than 10 eurocents a kilowatt-hour, making it competitive with traditionally generated power.

Other critics say the the plants would be built in several unstable states which could cut their supplies to Europe. Again, Knies dismisses the danger. 'It's not like oil. Solar power is gone once it hits your mirrors. It would simply be lost income.' The European Parliament has asked Desertec to propose short-term demonstration projects.