The United Arab Emirates’ US$40 billion deal with South Korea to build and operate four nuclear power plants in the UAE serves to underline how even hydrocarbon rich states are embracing nuclear power in a big way.
Of the total value of the contract awarded by the Emirates Nuclear Energy Corporation to a consortium led by the Korea Electric Power Company, US$20 billion serves as payment for the construction, commissioning and fuel loading of the projected four units, while the remaining US$20 billion goes for operating and maintaining the proposed reactors for a period of 60 years.
Work on the first nuclear plant is expected to commence in 2012, with all four commissioned between 2017 and 2020. The KEPCO-led consortium includes Hyundai Engineering and Construction, Samsung C&T Corp., Doosan Heavy Industries and the Japanese-U.S. company Toshiba-Westinghouse. ENEC and KEPCO have also negotiated the key terms under which Korean investors will have an equity stake in the project.
The Korean victory surprised many, since France’s Areva-led group was also engaged with the UAE on the nuclear deal. Moreover, the Koreans also beat the U.S.-Japanese reactor supplier GE-Hitachi.
On the face of it, the UAE seems to have opted for a partner that offers very little geopolitical gain. However, there are compelling reasons for the UAE’s decision. Nevertheless, ENEC took pains to stress that it is open to doing business with other countries in areas outside the scope of the primary contract, including long-term fuel supplies, joint investments and training and education.
In fact, given that the UAE will outsource fuel cycle activities to third countries, there is every possibility that France with its prowess in enrichment and reprocessing may be a substantial beneficiary.
The UAE’s desire for nuclear power is not as strange as it may sound. From the current round of climate change talks, it is clear that countries need to commit to reducing future carbon emissions. This applies to the UAE as well, which is set to see electricity demand almost treble from the current 15,000 megawatts to 40,000 megawatts in 2020.
Moreover, with the Gulf Cooperation Council states – Kuwait, UAE, Bahrain, Saudi Arabia, Oman and Qatar – seeing their water desalination requirements jump by 6-8 percent annually, the chief driver for nuclear energy may be their need for potable water.
The UAE presently generates 98 percent of its power from gas-based plants. Instead of using more of its gas reserves to meet its growing electricity consumption, the UAE can sell it in the international market, for profit. The avoided future consumption of gas can somewhat compensate for the substantial investment it is making in nuclear power, which it believes has the potential to increase the techno-scientific maturity of its economy.
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