Twelve European companies on Monday launched a €400 billion initiative to set up huge solar farms in Africa and the Middle East to produce energy for Europe.

The consortium which signed the protocol says the huge project could eventually provide up to 15 per cent of Europe's electricity needs.

Engineering giants ABB and Siemens, energy groups E.ON and RWE and financial institutions Deutsche Bank and Munich Re are among companies who agreed to begin development of the solar project by the end of October.

"Today we have taken a step forward" towards the project's realisation, said Nikolaus von Bomhard, head of the reinsurance giant Munich Re, which hosted the signing.

The Desertec Industrial Initiative would set up solar-power generators in North Africa and the Middle East and pumping massive amounts of electricity to Europe.

It would also provide a "substantial portion of the power needs of the producer countries," the group said in a statement.

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