Wednesday, 3 June 2015

Economic competitiveness of solar PV vs nuclear power

The conventional way to compare the cost of electricity generated by different sources is to calculate the levelized cost of electricity (LCOE) which is used to calculate the life cycle cost of producing electricity.

The LCOE depends on a number of variables such as capital costs, discount rate, fueling costs. The contribution of these variables to the total levelized cost vary from one source of electricity to another. For nuclear electricity, capital costs and the discount rate are the most important variables while for electricity produced by oil or natural gas, fuel costs are the dominant factor.  

Projected economic competitiveness of solar vs nuclear power
In the next figure, the LCOE of nuclear electricity (red) and solar PV (green) are projected until 2025. The LCOE of nuclear electricity is presented within a band between a low (3000 $/kW) and a high (7000 $/kW) capital costs. There is little reason to expect the costs of nuclear power to decline substantially. Indeed, historically, costs of nuclear power have only increased.

On the other hand, the estimates of how fast solar costs are expected to decline are striking. The global average LCOE of solar PV is around 137 $/MWh. This is really a conservative estimate and current utility values are much lower. LCOE of solar PV is expected to decline between to 6% to 10% per year for the next 10 years.

This is interesting because what analysts often forget is that it takes on average about 7-8 years to build a nuclear power plant while a solar PV utility takes about 1-2 years. In a conservative scenario, solar PV will be well within the cost range of nuclear power, and perhaps more economically competitive if coupled with thermal storage and better demand management. 
In this context, investing in nuclear could have an opportunity cost. For countries in the Middle East, building a nuclear power plant could easily take between 8-10 years. By that time, solar PV will likely be a more economically optimal option.

Saturday, 9 May 2015

With the Iran deal, the devil is in the details

Despite the wave of optimism that followed the announcement of the recent framework agreement between Iran and the P5+1 countries – the United States, Russia, China, the United Kingdom and France plus Germany – some serious obstacles remain. At this point, the “devil is in the detail” is perhaps the most-used phrase to describe the current standing in the talks with Iran over its nuclear program. But what are these details and what issues could bring the diplomatic honeymoon between Iran and world powers to an early end? ...Read more.

This article was published in The Daily Star on 29 April 2015.

Friday, 20 March 2015

Tehran may benefit from a nuclear freeze

As the talks over Iran’s nuclear program appear to be converging toward reaching a long-term comprehensive agreement, hints have emerged that Iran may be asked to cap its uranium enrichment capacity for a certain period of time. Although this is demanded by the United States, suspension of uranium enrichment program actually offers a valuable opportunity for Iran. It gives the Islamic Republic much-needed breathing space to strategize the country’s energy policy for the coming decades... Read more.

This article was published in The Daily Star on 20 March 2015.

Wednesday, 18 March 2015

Jordan's bet on nuclear power is risky

Nuclear power is a risky option for Jordan. Potential costs and time overruns added to growing public disapproval and emerging security threats represent serious risks that could force the Jordanian government to suspend or cancel the nuclear project. In such a scenario, the kingdom would incur substantial financial and reputational loses, while also missing out on opportunities to invest in increasingly promising renewable energy resources... Read more

This article was published in The Daily Star on 27 February 2015.

Friday, 5 December 2014

Could Nuclear Power Offer Jordan Energy Security?

Achieving energy security is considered to be the primary target of Jordan’s energy policy. Many countries in the Middle East and all over the world aim to reduce their reliance on foreign energy supply or at least minimize any potential disruption to their energy supply. Over the past few decades Jordan has suffered two major energy shocks: the loss of the subsidized oil from Saudi Arabia following the second Gulf war and loss of the Iraqi oil supply that was given to Jordan almost for free after the US invasion of Iraq in 2003. More recently, the Egyptian pipeline that supplies Jordan with natural gas, that was used to produce most of Jordan’s electricity, was attacked several times since 2011, disrupting gas-fired electricity production and forcing Jordan to shift to diesel and heavy oil to meet demand. This unexpected shift to more costly fuels is believed to have had a substantial impact on Jordan’s budget.
Jordan's proposed nuclear power plant site in Qasr Amra 
In energy policy debates, energy security is often defined by the end product such as oil, gas or nuclear electricity and not as a whole process or system that has many parts and dependencies. Building a nuclear power plant on Jordan’s soil would not alleviate Jordan’s reliance of foreign exports and technology. In fact, given Jordan’s technological and geopolitical status, nuclear power will likely promote such reliance. Establishing a fully indigenous nuclear program requires a full control over the nuclear fuel cycle, which is a chain of interdependent activities that includes uranium enrichment and waste management. With regard to uranium enrichment, Jordan’s current position is to forgo this option. This essentially means that Jordan would have to rely on foreign imports of enriched uranium—most likely from the country from which its reactor technology has been imported. This high level of technical cooperation and dependency on the technology and the fuel exporting country would have an impact on Jordan’s foreign policy and its political alignments, globally and regionally.

Another aspect of Jordan’s policy to achieve energy security is to diversify energy resources. Besides nuclear power, this includes investing in solar and other renewable energy resources. Jordan’s slim budget, however, hinders the possibility of embarking on a large-scale energy diversification project. Since nuclear and renewable technologies are capital intensive, this would limit Jordan’s affordability to run parallel massive investments. If Jordan decided to go for nuclear power, then the first impact of this policy probably would be much more limited, if not zero, funding available for renewable resources. This demonstrates that nuclear power has an opportunity cost associated with forgoing investments in potentially more economic and environmentally and socially favored renewable resources, particularly solar energy.

Saturday, 6 September 2014

Prospects of nuclear power in the GCC

Nuclear power has been proposed by many as a potential source of electricity generation and desalination for the GCC countries. Of these countries, the UAE has already embarked on constructing four nuclear reactors. Saudi policy makers have advanced ambitious proposals for a rapid buildup of nuclear power capacity over the next two decades. These proposals, however, do not always meet the criterion of economic competitiveness. Nuclear electricity is expected, and well on its way, to become more expensive than that produced by solar technologies in the coming decades. Solar photovoltaic and concentrated solar technologies have both been experiencing dramatic declines in prices whereas nuclear construction costs have remained high. There has also been little or no evidence of decrease in costs associated with learning.

On the other hand, the cost difference between nuclear and natural gas is dependent on the prices at which natural gas is traded in the international market. At low prices for natural gas, nuclear power tends to be more costly when compared to natural gas plants. For natural gas importing countries (the UAE and Kuwait and potentially Bahrain), as long as the purchasing price of natural gas is below $9.5/mmBTU, it would be more cost effective to continue importing natural gas. As for Saudi Arabia, Qatar and Oman, the costs of exporting natural gas shift the cross-over value between nuclear and natural gas to values between $11.4 and $13.6/mmBTU, depending on specific country parameters such as availability of infrastructure.

Countries make energy choices based on multiple factors. Economics plays an important but by no means sole role. Energy security, national prestige, capacity building in high technology areas, and the resultant ability to develop nuclear weapons are all reasons that countries use often to justify acquiring nuclear reactors. Supply side factors also play a role: nuclear reactor vendors have, in the face of limited prospects of sales elsewhere, have tried to make various arguments for why GCC countries should adopt nuclear energy. These aspects will likely influence the prospects of nuclear power in the GCC.  

Wednesday, 2 July 2014

Can SMRs Rescue Jordan’s Nuclear Program?

Ask anyone in the Jordan Atomic Energy Commission (JAEC) why Jordan should invest in nuclear power, and you will be given a lecture on the need to achieve “energy security.” And, of course, the JAEC argues that nuclear power could give Jordan what it terms “energy security.”

But carry on the discussion a bit further and you will realize that there are still major obstacles to Jordan’s ambitions of building the country’s first nuclear reactor, despite advancing plans to import a Russian light-water reactor. Unlike other countries in the Middle East that are embarking on nuclear projects or entertaining the idea, such as the UAE and Saudi Arabia, Jordan’s financial constraints are quite severe. An investment of the order of $10 billion is required to build Jordan’s first reactor and this constitutes about a third of the kingdom’s GDP. Even if Jordan were to cover half of the bill, such an investment would strain the kingdom’s slim budget.

Additionally, Jordan’s electricity grid is quite small (about 3.4 gigawatts) and the integration of a large- capacity addition delivered by a large reactor would pose serious technical challenges. The response of JAEC officials to this challenge is the claim that by 2020 and beyond, when they expect Jordan’s first reactor to start generating electricity, the size of the grid will be larger and that existing grid connections with neighboring regions in Egypt, Syria and Palestine would suffice to deal with the impact of shutting down the reactor for maintenance. Regardless of the credibility of these assertions, such a significant capacity addition to the grid would require a grid upgrade expected to cost around $500 million.

During a recent visit to Jordan, I also found many JAEC officials advocating small modular reactors (SMRs) as a solution to some of the major challenges to deploying large reactors in Jordan. Indeed, on paper SMRs could overcome some of these obstacles. Their relatively small power output offers better compatibility with the size of Jordan’s grid. More importantly, SMRs require lower initial investment than large reactors, which would help ease constraints on Jordan’s treasury. Looking at it from these vantage points, Jordan might serve as a textbook case for SMRs. It should be noted, however, that the majority of the SMR designs, including those that excite the JAEC leadership, are still in the development phase and are not really an existing option.

While the concept of SMRs may be appealing to Jordan, they would not be the silver bullet that would solve the country’s energy problems overnight, and several challenges to their development remain. Proponents claim that SMRs hold the solution to the four major problems of nuclear power: cost, safety, waste and proliferation. A recent Princeton University study by M.V. Ramana and Zia Mian challenging that claim pointed out that current SMRs concepts are, at best, designed to deal with one or two of the major issues at the expense of other issues. For example, the “price” for accruing the safety benefits that come with lower SMR power levels is the loss of economies of scale. There is a reason why existing power reactors are much larger than their early prototypes: smaller reactors are typically more expensive on a per unit cost basis. This means that on a per kilowatt basis, SMRs are more expensive to build and run than large reactors.

But the question of whether SMRs are a wise choice for Jordan begs a far larger question — namely whether Jordan, as a newcomer to the field, is ready to acquire nuclear power. Most importantly, there are serious questions about the competence and authority of the nuclear regulator, particularly given the recent merger of the Jordan Nuclear Regulatory Commission with the Electricity Regulatory Commission and the Natural Resources Authority, over which the International Atomic Energy Agency has expressed concern. Beyond that, though, there are other questions about Jordan’s internal political dynamics and how they are affecting the nascent nuclear program. For example, take the choice of a site for Jordan’s first nuclear reactor. After a national site selection committee evaluated a number of sites against IAEA criteria and chose a site near Al-Aqaba, the JAEC switched to another site in Al-Samra, which initially had been ruled out.

This is not the only example of interference by the JAEC with the regulatory and monitoring activities of Jordan’s nuclear regulator — such intrusion led to the sacking of the former head of JNRC and the resignation of his deputy. These developments do not point to a promising start for Jordan’s nuclear program or a solid base for importing reactors, whether SMRs or large reactors.

This article was published in Nuclear Intelligence Weekly on 27 June 2014

Thursday, 22 May 2014

Uranium enrichment and the dilemma of Iran's practical needs

I think no one was really surprised to learn that the diverging opinions between Iran and the P5+1 on the issue of practical needs for uranium enrichment has the potential of being a showstopper. Indeed, Iran's enrichment plans have always been a serious concern and a source of fear for those wishing for a deal. What is required by the P5+1 is known but what is not known is how far the Iranians are willing to go to save the negotiations. Of course, there is a room for political imagination here and there and face-saving actions on both sides but how will the gap between what the P5+1 is willing to accept and what Iran claims to be its practical needs be bridged?

The main two issues are the quantity and quality of centrifuges and the stockpile of enriched uranium. These two parameters, together would, to the first order, determine the breakout time Iran needs to develop a nuclear weapon if it chooses to.  Analysts suggest that a timeline between six and twelve months could be achieved by limiting the number of centrifuges to between 2000 and 6000 first-generation IR-1 Iranian centrifuges (or significantly lower numbers if more advanced IR-2 centrifuges are included) and reducing enriched uranium stocks, especially near the 20% level. The scale of the gap between what is perceived as acceptable by the p5+1 and what Iran's claims to be its practical needs can be easily measured if one estimates the enrichment capacity needed by Iran to fuel the Bushehr reactor only. Such a capacity would make producing HEU for weapon purposes a walk in the park.

Any given breakout time can be achieved using many different combinations of centrifuges and enriched uranium stocks as shown in the above figure. There are trade-offs between constraints on centrifuges and constraints on stocks that will enable negotiators to consider a range of possible paths but whatever numbers and combinations are chosen, lengthening the breakout timeline to between six and twelve months would require substantial reductions in current Iranian centrifuge and stockpile levels.

Wednesday, 2 April 2014

A Win-Win Solution for Iran's Arak Reactor

The Arak reactor, which has been under construction for years, is one of the key issues at the center of the ongoing negotiations between Iran and the P5+1 group on a “comprehensive solution that would ensure Iran’s nuclear programme will be exclusively peaceful.” Negotiators from the P5+1 states and Iran will meet for a third round of talks in Vienna on April 7-9.
In a new article published in the April issue of Arms Control Today, I and other colleagues at Princeton proposed options changing the fueling and operating power of the Arak reactor to make it less of a proliferation concern. The conversion steps described in the analysis are technically feasible and would not compromise Arak’s usefulness for civilian purposes. The proposed modifications provide a sound basis for resolving one of the key points of contention in the talks on Iran’s program.
The full article can be found on this link