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.