In the face of rising electricity demand, nuclear power should enable MENA states to diversify their sources of energy and reduce their carbon footprint. But the outlook is mixed: while six countries have nuclear projects under way, planned or proposed, raising power generation capacity by 39GW, Oman, Qatar and Kuwait have cancelled proposed nuclear projects in the wake of the Fukushima disaster, Apicorp said in its latest “Energy Research” report.
Fiscal constraints are one of the major barriers to progress, and the expectation is that nuclear power will account for only 3% of Middle East electricity generating capacity by 2040.
Sustained increases in electricity demand in tandem with continuing demographic growth have prompted a number of MENA states to consider alternative sources of power generation, including nuclear. For countries in the GCC, nuclear power would free up more oil and gas for export, while net energy-importing countries like Egypt and Jordan would be able to secure long-term energy and reduce their import bills. Yet at present, nuclear power facilities with capacity of just 5.6GW are under construction.
Only a further 6.4GW are likely to come online by 2030. The International Energy Agency (IEA) estimates that by 2040, the region’s nuclear industry will account for only 3% of electricity generation, with oil and gas accounting for 70%.
Several factors make the nuclear option attractive. Nuclear plants emit considerably less greenhouse gases compared with fossil fuel-fired capacity and help countries reduce their carbon footprint. Cost competitiveness has improved in recent decades, allowing nuclear technology to become a serious component of energy diversification strategies. Nuclear also advances human capital and promotes employment in a new energy sector. But development of the nuclear sector to a level at which it competes with oil and natural gas will be both complex and expensive. Countries with ambitions to build nuclear power plants will need to find funding, attract human capital and put in place clear and stable regulatory frameworks. Governments will need to prove to the global community that their nuclear programs are peaceful and ensure public acceptance of their programs. Public acceptance in the region is generally higher than that in Europe, and in the UAE, this helped support the implementation of its program.
The political ramifications of a nuclear industry in the region also need to be addressed. Following the lifting of Iranian sanctions, there were concerns on how countries in the region would pursue their individual programs and proposals were made to use the next decade to agree on region-wide restraints. These include banning the separation of plutonium from spent fuel, limiting the level of uranium enrichment, and placing enrichment plants under multinational control.
Nuclear projects require substantial upfront capital but exhibit lower operational and fuel costs over their lifetime- typically 50 years. Upfront capital costs range from $3bn-6bn/GW of installed capacity, more than double the cost of equivalent coal- or gas-fired plants. Investment decisions are therefore heavily dependent on the availability of finance and government support.