The regions major economies have turned to nuclear power to address future energy shortages, but there are many hurdles to be overcome if they are to realise their atomic energy ambitions
Delivering a nuclear energy programme in the Middle East is one of the most controversial and difficult policies any government could choose to pursue.
It is domestically unpopular because of the enormous cost and because of fears over safety, and internationally difficult due to links with nuclear weapons and, in a region that is politically unstable, the threat of extremists gaining access to radioactive material.
It is an indication, therefore, of how serious the regions energy shortage is that so many Middle East governments have chosen to pursue nuclear energy programmes.
|Power generation costs*|
|Capital cost ($/MWh)||Fixed O&M cost ($/MWh)||Total system cost ($/MWh)|
|Photovoltaic solar power||130.4||9.9||144.3|
|Concentrated solar power||214.2||41.4||261.5|
|*=Estimated levelised cost for plants entering service in 2018; O&M=Operations and maintenance; MWh=Megawatt hours. Source: US Energy Information Administration|
Egypt became the latest country to join the regions nuclear race when President Abdul Fattah al-Sisi announced in his inauguration speech in April, that developing nuclear power was a priority for his government.
But despite the many ambitious statements of intent, few have made much progress in bringing nuclear power projects to the market. Only Abu Dhabi has reached the construction stage on its estimated $20bn, 5.6GW Baraka nuclear power plant the UAEs first.
There are a lot of companies and governments around the world talking about a nuclear renaissance, but a much smaller subset of them are becoming reality, says Chris Ball, managing director of Nuclear at UK-based Atkins.
To turn their nuclear plans into action, the regions decision-makers must overcome a number of financial, technical and political challenges.
In order to meet the needs of a growing population and industrial base, the GCC alone requires an additional 171.7GW of electricity generation capacity by 2020, to more than double current installed capacity of 161.2GW.
Even in a region that is home to the worlds greatest concentration of hydrocarbon reserves, its gas reserves, which fuel most regional power plants, cannot keep up with demand growth.
According to data from BPs 2013 Energy Outlook 2030, the Middle East will account for 23 per cent of global gas demand growth by 2030, with only China forecast to record higher demand in this period.
With the sole exception of Qatar, all GCC states lack capacity to meet projected future gas demand. All are looking at alternative energy sources as a way to reduce dependence on the fuel and preserve valuable oil reserves for export.
But while renewable energy is a popular option, nuclear power is an essential part of the energy mix, say proponents.
Nuclear power is more reliable than renewable energy, says Bob Bryniak, CEO of Golden Sands Management Consulting in Dubai. It tends to be used as baseload power [consistent supply that meets capacity requirements], where renewables are used as peak load or intermediary power as production is dependent on certain weather conditions or daylight.
Low operating costs
In terms of scale, no other source can match the power generation capacity of nuclear power.
While the largest single renewable energy project currently planned in the region is the 200MW concentrating solar power (CSP) Noor 2 plant in Morocco, Abu Dhabis 5.6GW Baraka nuclear plant will produce 28 times more electricity.
The high output means operating costs are relatively low. The US Energy Information Administration estimates that a new Nuclear Power Plant commissioned in 2018 would have a total system cost of $108.4 a megawatt hour (MWh), significantly less than the $144.3 a MWh cost of a photovoltaic (PV) solar, or a $261.3 a MWh for a CSP solar plant.
But despite the well-honed arguments in favour of nuclear energy, the obstacles to nuclear power are also significant.
High capital costs
The first of these is the substantial capital investment required to build a nuclear power plant.
A nuclear power station over its lifetime, 40-60 years, generates very cost-effective electricity, says Ball. But investment is very front-end loaded with the initial capex [capital expenditure].
Abu Dhabis Baraka plant will cost an estimated $20bn to build and is scheduled to be financed through a mixture of government funds, export credit and international bank loans.
While the emirate can afford to spend billions of dollars, with government funds expected to reach $6bn, and also can guarantee loans and funding from international investors, raising such vast sums may prove difficult for less solvent governments.
Saudi Arabia and the UAE they have got money to build but for others, such as Jordan, how can it get its programme financed? says Ball. Will it be through members of the GCC? Will it be through international reactor vendors? Or can international utilities come in and finance it?
In Jordan, it has been reported that the Russian group selected to build the countrys maiden nuclear plant will contribute up to almost half of the projects estimated $10bn capital cost, with the scheme possibly being developed under a structure similar to the build-own-operate (BOO) model.
However, with the Russians still not having signed the contract and little information on the financing of the scheme having been released, the financial future of the project is not guaranteed.
Egypts first proposed nuclear power plant at El-Dabaa will reportedly have an initial financial outlay of at least $6bn, and Cairo is unlikely to have the resources to fund this from its own budget or from borrowing from development agencies.
Cairo may have to rely on grants from foreign governments or on a developer covering most of the capital investment.
However, with Saudi Arabia and the UAE having delivered a $10bn aid package to Egypt in 2013, it is unclear whether the Gulf states will be willing to grant more financial assistance for a single project.
Countries planning to develop multiple reactors, such as the UAE and Saudi Arabia, will also be more attractive to investors than those looking to develop a single plant.
They [UAE and Saudi Arabia] are not just talking about building one, they are talking about a series of power stations and thats important, says Ball.
Because if you have a country thats only going to build one power station, then companies will be less willing to go through all the pain of setting up the business, mobilising people and developing a supply chain if thats it.
While the capital cost of building nuclear plants is substantial, the requirement for a fuel cycle also forms a sizeable expenditure, with the production of nuclear power creating significant costs at the front and back end of the generation process.
Emirates Nuclear Energy Corporation (ENEC), which will build and operate the Baraka plant in Abu Dhabi, has agreed a $3bn deal to buy fuel from six international companies for the first 15 years of operation.
Jordan, meanwhile, is planning to mine its own uranium reserves to fuel its nuclear programme. Although this may result in cheaper fuel costs in the future, the construction of a plant to process mined uranium would cost more than $1bn, and then technology to enrich the mineral to enable power generation would result in significant additional extra investment.
Management of radioactive waste is another major cost. The effects of nuclear energy on people and the environment have been brought into sharp focus following the Fukushima disaster in Japan. Governments must ensure they have adequate infrastructure and strategy for safely disposing of atomic waste.
Supply chain challenge
The lack of regional supply chain of materials and labour will provide a further test for states looking to develop nuclear power programmes.
Nations in the Middle East are embarking on nuclear for the first time so creating a sustainable workforce and sustainable supply chain for the first time will be difficult, says Ball.
Reactor vendors will say they can build a plant in three to five years, but doing it in a region several thousand miles away from your base, factories and supply chain makes it a completely different proposition.
In addition to the challenge of recruiting labour to build the plants, governments will also have to guarantee a trained workforce to run them. Ball says that a build-own-operate model, such as planned in Jordan, would have the benefits of transferring international skills and knowledge to local populations.
It is a pretty good model, because it takes nuclear operating experience into the region, where they can work with local organisations and local people to train them up, says Ball.
Enec is already training a local workforce in Abu Dhabi, having enrolled 130 Emirati students on a Higher Diploma in Nuclear Technology (HDNT) programme to prepare them for a career in the nuclear industry.
Although finance and a supply chain are important, without international political support it is almost impossible to successfully develop a nuclear power programme.
Irans international isolation as a result of its unregulated nuclear activities provides a stark warning to other countries in the region of the consequences of pushing ahead with atomic programmes without international agreement.
While approval from international nuclear regulatory bodies such as the International Atomic Energy Agency (IAEA) is important, the real power in the nuclear industry is held by the countries which develop nuclear power and technology.
Without support from the major players, such as the US, it is extremely difficult to develop nuclear energy, says an executive at one international nuclear company. That is why Iran has struggled with its programme, you need access to knowledge and technology from countries that have done it.
With the worlds reactor vendors and power companies eagerly awaiting the start of Saudi Arabias promised nuclear power programme, all are aware it cannot begin until Riyadh has signed a 123 agreement with the US, which enables nuclear technology and information sharing.
Nothing will start until Saudi Arabia has received approval from the US, adds the nuclear source. It has signed an MoU [memorandum of understanding], but until it signs the agreement there wont be any progress.
The need for Western technology and expertise ensures that nuclear programmes come with political strings attached.
Washington, in particular, will pull on those strings to influence the foreign policy of key regional players Riyadh and Cairo on issues such as Syria and Iran in return for nuclear agreements.
So while regional governments are prioritising nuclear power, they may find they have difficult decisions to make on the extent to which they will make any political concessions to succeed with their atomic energy programmes.
Leaders will also face considerable pressure to implement structural economic reform programmes in return for assistance and approval for nuclear schemes.
The US temporarily suspended aid to Cairo in 2013 over concerns over undemocratic practices, following the ousting of former President Mohamed Mursi, and the governments quest for nuclear power gives international powers another avenue to exert influence on its domestic and regional policy.
Moreover, the nuclear industry will not lend support for nuclear projects in countries with questions over security.
Political stability is vital for a nuclear power programme to be successful, says a source from an international power company based in Dubai. Due to its nature, countries seeking to develop it require the complete confidence of the international community. This has probably become more important since Fukushima.
Ultimately, events in the region over the past three years have highlighted the importance to governments of meeting the expectations of their people providing electricity, water, housing and jobs.
Nuclear power offers a compelling solution, but the costs are high.
While the financial and political positions of the aspiring nuclear countries vary significantly, their ability to negotiate and cooperate with the international community will form a key determinant of whether their nuclear plans will succeed.