Energy Transitions in the Gulf: Key Questions on Nuclear Power

Energy Transitions in the Gulf: Key Questions on Nuclear Power Energy Transitions in the Gulf: Key Questions on Nuclear Power Edited by Ali Ahmad, PhD Gulf Research Centre Cambridge Gulf Research Center E-mail: [email protected] Website: www.grc.net Jeddah Geneva Cambridge Gulf Research Center Gulf Research Center Gulf Research Centre 19 Rayat Al-Itehad St. Foundation Cambridge P.O. Box 2134 WMO Building - 2nd Floor Centre of Islamic Studies Jeddah 21451 Avenue de la Paix, 7bis University of Cambridge Kingdom of Saudi Arabia CH-1211 Geneva Sidgwick Avenue Switzerland Cambridge CB3 9DA, UK First published 2018 Gulf Research Centre Cambridge © Gulf Research Centre Cambridge 2018 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the Gulf Research Centre Cambridge. ISBN: 978-1-909864-20-7 The opinions expressed in this publication are solely those of the authors and do not necessarily state or reflect the opinions or position of the Gulf Research Centre Cambridge or the Issam Fares Institute for Public Policy and International Affairs or the American University of Beirut. About the Energy And Security Program The Energy Policy and Security Program at the Issam Fares Institute for Public Policy and International Affairs was launched in 2016 as a Middle East-based, interdisciplinary, platform to examine, inform and impact energy and security policies, regionally and globally. The Program closely monitors the challenges and opportunities of the shift towards alternative energy sources with focus on nuclear power and the Middle East. The Program has been established with a seed grant support from the John D. and Catherine T. MacArthur Foundation. About the AUB POLICY INSTITUTE The AUB Policy Institute (Issam Fares Institute for Public Policy and International Affairs) is an independent, research-based, policy-oriented institute. Inaugurated in 2006, the Institute aims to harness, develop, and initiate policy-relevant research in the Arab region. We are committed to expanding and deepening policy-relevant knowledge production in and about the Arab region; and to creating a space for the interdisciplinary exchange of ideas among researchers, civil society and policy- makers. Main goals u Enhancing and broadening public policy-related debate and knowledge production in the Arab world and beyond u Better understanding the Arab world within shifting international and global contexts u Providing a space to enrich the quality of interaction among scholars, officials and civil society actors in and about the Arab world u Disseminating knowledge that is accessible to policy-makers, media, research communities and the general public About the Gulf Research Center The Gulf Research Center (GRC) is an independent research institute founded in July 2000 by Dr. Abdulaziz Sager, a Saudi businessman, who realized, in a world of rapid political, social and economic change, the importance of pursuing politically neutral and academically sound research about the Gulf region and disseminating the knowledge obtained as widely as possible. The Center is a non-partisan think-tank, education service provider and consultancy specializing in the Gulf region. The GRC seeks to provide a better understanding of the challenges and prospects of the Gulf region. Contents Introduction - Energy Transitions in the Gulf: Key Questions on Nuclear Power ......................................................................................... 13 Ali Ahmad 1. Economic Determinants of Nuclear Power in the Gulf ............................... 19 Omer Akkaya 2. Economics of Nuclear and Solar Desalination for the Middle East ............. 43 Rami W. Bitar and Ali Ahmad 3. Requirements for High Solar Penetration in Electricity Production in Saudi Arabia ............................................................................................. 67 Philippe Chite and Ali Ahmad 4. Nuclear Energy for the Middle East: Technology Choices and Considerations .......................................................................................... 105 Abdalla Abou Jaoude and Anna Erickson 5. Iran, Uranium, and Future Proliferation Dynamics in the Middle East ..... 133 Ryan Snyder 6. Confidence Today, Weapons of Mass Destruction Free Zone in the Middle East Tomorrow .............................................................................. 155 Marianne Nari Fisher About the Contributors ..................................................................................... 183 About the Contributors Acknowledgments This volume is based on selected papers submitted for the “Nuclear Energy for the Gulf: Key Questions and Opportunities” workshop organized as part of the 2016 Gulf Research Meeting held in Cambridge, United Kingdom, in August 2016. The workshop was sponsored by the Gulf Research Center (GRC). On behalf of the contributors to this volume, I would like to thank Dr. Abdulaziz Sager, chairman of the GRC, and Dr. Christian Koch, director of the Gulf Research Centre Foundation, for their support in convening the workshop as well as in producing this volume. Also, I would like to thank Elsa Courdier and Sanya Kapasi from the GRC for their help throughout this project. Special thanks go to Dr. Nesreen Ghaddar of the American University of Beirut for her help in running the workshop, and to Dr. Amir Mohagheghi, Dr. Nadira Barkatullah, and Mr. Ruediger Koenig for their valuable feedback and insights during the workshop. The publication of this volume and my work on nuclear power and the Middle East would not have been possible without the support of the John D. and Catherine T. MacArthur Foundation (Grant: G-1511-150437) and their Nuclear Challenges Program. Finally, I would like to thank the authors of the papers included in this book for their valuable contribution to an important and timely topic. Beirut, Lebanon Ali Ahmad Gulf Research Centre Cambridge 11 Energy Transitions in the Gulf: Key Questions on Nuclear Power 184 Issam Fares Institute for Public Policy and International Affairs Energy Transitions in the Gulf: Key Questions on Nuclear Power 1 Energy Transitions in the Gulf: Key Questions on Nuclear Power Ali Ahmad Introduction Despite being among the world’s top oil producers, Saudi Arabia and the United Arab Emirates (UAE), the Gulf ’s largest economies, have ambitious plans to invest in nuclear power. The UAE is currently in the process of building four nuclear reactors; the first one is almost complete and is expected to be connected to the grid and generate electricity in 2018. On the other hand, Saudi Arabia has announced its intention to build 16 nuclear reactors by 2032; the date was subsequently revised to 2040. However, unlike the UAE, the Kingdom is yet to announce any contractual agreements with reactor technology vendors. Moreover, it is interesting to note that the Saudi 2030 Vision did not mention nuclear power, though it stated clearly the Kingdom’s need for a competitive renewable energy sector, specifically mentioning solar and wind power. Outside the Gulf, several Middle Eastern countries are also in the process of acquiring, or expanding, their nuclear energy programs. Iran’s Bushehr is the only operating commercial nuclear power reactor in the region. The Islamic Republic also has ambitious plans to expand its nuclear program under the Joint Comprehensive Plan of Action that was signed between Iran and the P5+1 (United States, United Kingdom, France, China, Russia and Germany). Other countries such as Turkey, Gulf Research Centre Cambridge 13 Energy Transitions in the Gulf: Key Questions on Nuclear Power Jordan, and Egypt have committed plans to build nuclear reactors, though none of these plans has yet materialized. The official rationale for investing in nuclear energy differs from one country to another in the region, but broadly speaking, it seems to emerge from the need to improve energy security through reducing the reliance on oil and natural gas. For producing countries, domestic consumption of oil and gas is perceived as unsustainable, particularly with the high economic and population growth witnessed in the Gulf. Moreover, reliance on oil and gas to generate electricity could entail an opportunity cost when prices are high. As for oil and gas importing countries, price volatility and security of supply provide a major incentive to look for alternative energy sources, including nuclear. As the interest in nuclear energy in the region grows, the need to better understand the underlying issues becomes a necessity. Specifically, this volume aims to examine the economics of nuclear power for the Gulf and the Middle East. The economic competitiveness of nuclear power depends on its cost relative to traditional energy sources such as oil and natural gas as well as to alternative energy sources such as wind and solar power. Nuclear projects have suffered some major cost and time overruns, even in countries with high nuclear capacity such as France and the US. On the other hand, generation costs of solar electricity have dramatically declined over the last decade and are projected to decline further as relevant technologies mature. Besides economics, this book also discusses nuclear security and ways to enhance it. The talks over Iran’s nuclear program have highlighted the security risk associated with nuclear power. The global expansion of nuclear power

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