In March, Abu Dhabi’s ambitious nuclear programme reached a key milestone when Emirates Nuclear Energy Corporation (Enec) applied for a licence to build a third and fourth nuclear reactor in the Western Region of the emirate.

Enec, which is leading the development of nuclear power in the UAE, received approval to build the first two nuclear reactors in July 2012. Preparation works for the first reactor are already well under way.

“The application shows that the programme is moving along as planned. Work is already ongoing with preparation for the first plant,” says a manager at a major European power firm based in Dubai.

GCC first

While some regional governments shelved their nuclear power plans following the 2011 Fukushima disaster in Japan, Abu Dhabi has push aheaded with its programme. Atomic energy will provide up to 20 per cent of Abu Dhabi’s power generation capacity by 2020.

With good progress being made on the construction side, a delay in closing financing for the scheme is the only issue facing the developers at present. The project is being eagerly watched by Saudi Arabia and Jordan, which hope to follow its lead.

The nuclear project is being developed to meet rapidly rising demand for electricity in Abu Dhabi and the northern emirates. The UAE capital reported steady annual demand growth of 6 per cent in the five years to 2008. Since then, the emirate has consistently recorded growth of more than 10 per cent a year, reaching a decade high of 13.9 per cent in 2011 as peak demand hit 7,683MW.

The main reason for the spike in demand in 2011 was increasing power exports from Abu Dhabi to the northern emirates, which rose by 19 per cent to about 2,000MW. The majority of the exports (about 1,198MW) went to the Federal Electricity & Water Authority (Fewa), while 707MW went to Sharjah Electricity & Water Authority (Sewa). Exports to Fewa in 2012 peaked at 1,389MW and to Sewa at 715MW.

Peak demand within Abu Dhabi emirate, meanwhile, grew by about 800MW in 2011, largely due to a doubling of supplies to Abu Dhabi National Oil Company (Adnoc), which took more than 500MW.

While supplies to Adnoc are expected to stabilise at 2,400-2,500MW between 2016-20, there will be a further surge in exports to 5,400MW by 2020. Fewa will account for the lion’s share of the total taking an estimated 3,500MW, with Sewa taking some 1,800MW.

As of 2012, Abu Dhabi had an estimated installed capacity of 13,849MW. With peak demand expected to reach 23,120MW by 2020, Abu Dhabi is targeting an installed capacity of 26,588MW, to enable a 15 per cent reserve margin. This will require the emirate to almost double its 2012 generation capacity and additional gas is in short supply.

Abu Dhabi announced in early 2008 it was planning to develop nuclear power to contribute about a quarter of the emirate’s total energy output by 2020 to protect its valuable natural resources and reduce carbon emissions.

“From an energy security and sustainability perspective, nuclear energy has an important role to play in our energy mix and residents understand this connection,” Mohamed al-Hammadi, Enec’s chief executive officer, recently told a public forum organised by the firm to discuss Abu Dhabi’s nuclear programme.

Enec awarded a South Korean consortium led by Korea Electric Power Corporation  (Kepco) a $20bn contract to build four reactors in 2009. The first is scheduled to come online in 2017, with the remaining three planned for completion in 2020.

By 2010, Saudi Arabia, Kuwait, Qatar, Jordan, Bahrain and Egypt were all considering developing nuclear schemes. However, the Fukushima incident raised concerns over the safety of nuclear energy around the globe, and the Middle East was no different. Kuwait was one of several countries that subsequently shelved plans to develop a nuclear programme.

Abu Dhabi took a more pragmatic approach and carried out some detailed research before deciding to proceed with its ambitious scheme.  In the aftermath of Fukushima, Enec sent a delegation to Japan on a fact-finding mission to explore issues surrounding redundancy capacity and containment of fuel, with the aim of preventing a similar crisis from happening in the future.

“The UAE’s nuclear energy programme is built on the most rigorous standards of safety, transparency and security,” Al-Hammadi told the public forum. In any case, the project is moving ahead fast.

Construction progress

Construction work on the Baraka 1 unit began in July 2012. As of November 2012, Kepco said it had completed almost 23 per cent of the construction work for units 1 and 2, and was running eight weeks ahead of schedule. In March, Enec said the containment liner plate (CLP) had been installed in the Baraka unit 1 nuclear reactor building.

Enec plans to apply for an operating licence for the first reactor in 2015 and hopes to begin pouring safety concrete in unit 2 before the end of 2013.

Since the appointment of Kepco to build its nuclear plant, Enec has continued to award major contracts on the scheme.

In August, Enec signed contracts worth a total of $3bn with six international companies, including Russia’s Tenex and France’s Areva, to supply nuclear fuel, conversion and enrichment services for the four reactors being developed in Abu Dhabi. Each of the four reactors will produce 1,400MW of electricity.

Financing delays

MEED reported in January that the Abu Dhabi government had yet to approve the financing of the emirate’s nuclear power scheme. Sources close to the process say everything else has been finalised, but until the Executive Council, Abu Dhabi’s highest decision-making authority, gives its approval it cannot be closed.

The $20bn financing is split between a $2bn commercial bank facility, $10bn from the Export-Import Bank of Korea (Kexim), about $2bn from the Export-Import Bank of the US (US Exim), and $6bn in direct funding from the government of Abu Dhabi.

An Abu Dhabi-based source close to the deal told MEED that the financing was supposed to have been finished by the end of 2012, but is still awaiting government approval.

However, sources close to the nuclear deal say there is no reason for panic. “Given the size of what the government is committing to, and the nature of this project, it is not surprising that they are taking some time,” said the source.

The Enec project, like the series of renewable energy schemes now being developed in the region, confirm the shift in the Middle East power sector away from fossil fuels as governments look to tackle a growing shortage of gas.

Regional model

The success of the Abu Dhabi project is viewed as vital within the international power market, if planned schemes in other countries such as Saudi Arabia and Jordan are to come to fruition.

“Abu Dhabi is very important for the future of the region’s nuclear schemes. As with anything, the first time is always the hardest,” says the manager of the Dubai-based power firm.

The region’s nuclear ambitions have faced a several obstacles since the energy source was first seriously discussed 15 years ago. The global financial crisis, the Fukushima disaster and the Arab Uprisings have all played a part in the delay or cancellation of nuclear programmes.

Abu Dhabi has remained committed to its nuclear efforts, and if it is able to successfully deliver on its plans, it will provide a blueprint for other regional states to follow.

Key fact

Nuclear energy will provide up to 20 per cent of Abu Dhabi’s power generation capacity by 2020

Source: MEED