On December 27, 2009 the UAE took a big step in a rapid development program by signing a contract for four nuclear power plants from South Korea that would each generate 1400 MWe. That contract generated quite a buzz within the energy business and in the financial press. There are plenty of reasons why this project is so interesting.
- The cost and revenue opportunities are huge – $20 billion for the power plant construction and probably another $20 billion in servicing during the 40-60 years that the plants will be operating.
- The UAE had no existing nuclear infrastructure.
- The South Koreans, who have a large quantity of current domestic nuclear plant construction and operating experience, had never exported complete nuclear power plants.
- The UAE recognized that they needed to take action to reassure the nuclear suppliers group that they had no interest in a domestic nuclear fuel manufacturing capability. By doing so, they would silence questions about the possibility of using the commercial program as a cover for nuclear weapons development.
The National, out of Abu Dhabi, has recognized the international interest in this project and has published an article titled Work begins on our nuclear future that provides some useful details about the power plant site, the progress being made in preparing the site for the influx of foreign workers, the establishment of a regulatory system, and the importance of moving with due haste to complete the plants. It also supplies some reminders on why UAE decision makers chose to develop a large nuclear project in the first place.
The Government says the pace of the nuclear programme is being driven by ballooning electricity demand that leaves little room for construction delays. Rapid economic development and population growth have raised Abu Dhabi’s electricity consumption as much as 10 per cent per year, forcing the Government to build a multibillion-dollar gas-fired power station nearly every year.
The growth rate, among the highest in the world, will see electricity demand double even before the first reactor comes online in 2017, according to the Government’s ambitious reactor completion schedule.
A government study concluded in April 2008 that the country’s abundant natural gas reserves, which have supplied low-cost electricity for decades, could not be develpoed (sic) quickly and cheaply enough to indefinitely fuel each new power station. Burning oil, meanwhile, would be prohibitively expensive, cutting into the emirate’s exports, officials said. Coal would be too polluting and solar power too expensive to play the dominant role in electricity generation.
It is interesting to note that the finding about the rate at which natural gas production can be expanded come from a country that has access to some of the most prolific and accessible gas deposits in the world. It is also a country where the people who decide how fast to drill and determine the rules for drilling are the same people who own the resources and collect the revenue. Under the UAE system, there is little opportunity for opposition and questioning of drilling decisions at the local level.
It is also interesting to note that the judgement about the expensive nature of solar energy was made for a country that is baked with intense sun, has little annual rainfall, large areas of vacant land with little vegetation and is located at a latitude that is closer to the equator than any point in the continental United States. (Abu Dhabi is at 24° 27′ 52.7″ while Key West, Florida, the southernmost point in the contiguous US is at 24° 32′ 40.7″. As pointed out by a commenter, there are portions of the United States, notably in Hawaii and Puerto Rico, that are located at lower latitudes.)