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UAE charts decarbonization course with additional nuclear power

21 April 2022 Kevin Adler

With commercial operations beginning in March at the second reactor at the Emirates Nuclear Energy Corporation's Abu Dhabi Barakah nuclear plant, United Arab Emirates (UAE) took another step down the path the Persian Gulf country is choosing to decarbonize its energy sector.

UAE's nuclear nameplate capacity has now reached 2.8 GW, and if reactors three and four at the plant reach commercial operation as expected in the next two calendar years, the country will have doubled its capacity to 5.6 GW.

By the end of 2024, nuclear energy will account for over 20% of the integrated Abu Dhabi and Northern Emirates generation capacity, S&P Global Commodity Insights reported in an analysis of the impact of the projects. Because nuclear plants are baseload energy that operate 24/7, S&P Global said the reactors' output could account for close to 40% of the nation's electricity generation.

"Successful operation of the nuclear facility is a cornerstone of Abu Dhabi's clean energy strategy," S&P Global said.

Local power and water utility EWEC has been able to reduce its use of natural gas-fired generation, "and in particular to back out low efficiency/older generation technology in its system" as a result of the shift to nuclear, S&P Global said.

S&P Global estimates that the Abu Dhabi power plant will reduce CO2 emissions by 18 million metric tons/annum, compared with operating the country's least-efficient gas units. That improvement alone is 25% of the country's targeted CO2 emissions reduction by 2030, according to its nationally determined contribution (NDC) filed as part of the Paris Agreement.

In its NDC, the country set a target of reducing annual GHG emissions by 23.5% from its business-as-usual scenario for 2030, which would have been 310 million mt. The nuclear units provide a reduction of nearly 72 million mt/year.

The nuclear facilities are the second phase of a long-term clean energy program that began with a 1.2-GW solar PV facility in late 2019. A 2-GW solar PV plant is expected to come online this year as well, S&P Global said.

Other nations look at nuclear solutions

The idea that nuclear power can provide emissions-free energy cheaply, reliably, and safely is gaining interest as decarbonization programs around the world are implemented in earnest. Nuclear power provided 10% of the world's electricity in 2019, according to the International Energy Agency.

The International Governmental Panel on Climate Change's (IPCC) Working Group III report, released in early April, included nuclear power in its all-of-the-above prescription for limiting global warming to 1.5 degrees Celsius through 2050. Each of the four scenarios modeled for the report show that nuclear power generation would rise from 2010 to 2050, by a range of 90% to 501%.

At the same time, IPCC acknowledged the political challenges that still face the industry.

"Though comparative risk assessment shows health risks are low per unit of electricity production, and land requirement is lower than that of other power sources, the political processes triggered by societal concerns depend on the country-specific means of managing the political debates around technological choices and their environmental impacts," IPCC said.

That attitude is changing, said Ted Jones, senior director of the national security and international programs for the Nuclear Energy Institute (NEI), a US-based advocacy and technology export group. National leaders recognize that nuclear power can help to solve both the need for decarbonization and the natural gas supply crisis and price spikes seen in the last six months, he said.

"Some people believe that it would take too long [to build nuclear reactors], but now because of the global natural gas crisis, you've got countries looking to build LNG terminals to deal with lack of gas. That's a years-long endeavor. Natural gas is not cheap, not fast, and not carbon free, either," Jones told Net-Zero Business Daily by S&P Global Commodity Insights.

As renewable power becomes a larger part of the resource mix, the reliability of nuclear energy is becoming another strong selling point. And reliability also means that the cost of nuclear power is less than it appears at first.

"When you look at the levelized cost of new nuclear power vs. a new wind installation [and] have to be able to meet the demand as it exists around the clock, having firm, clean power is extremely valuable," he said.

According to Jones, a study of decarbonization in the US Pacific Northwest conducted by E3 compared several strategies for decarbonizing in Washington State by 2045 (the mandated deadline). This included a renewables-only option (with energy storage backup) and renewables-plus-nuclear power. The nuclear option, which would be both relicensing the one existing nuclear plant in the region and installing small modular reactors (SMRs), would save $8 billion per year, he said.

"As you approach 100% decarbonization, you have to significantly overbuild renewables capacity and/or add massive amounts of battery-scale storage," he said. "It's just not viable. The value proposition of nuclear becomes very clear."

This equation applies beyond the US or the UAE, with European nations taking a very serious new look at nuclear power's potential.

Europe's energy crisis began last summer when wind power was unexpectedly low, and gas-fired power had to provide unexpected levels of supply. The Ukraine crisis then sent prices spiraling up a second time. In response, the European Commission in February extended its green finance criteria to nuclear power (and gas-fired power).

Countries across Europe are showing new interest in traditional nuclear plants and new-generation SMRs, Jones said. These include:

  • The UK approved a plan in April to build up to eight new conventional nuclear reactors and triple generation capacity to 24 GW by 2050. Also, Rolls Royce said this week that it expects approval for its first UK SMR in 2024.
  • The Czech Republic's state-owned energy company, CEZ, selected two technology partners last year for a new reactor. Jones said that on a recent trade mission in Prague, he was told the government has asked for bids for three more large reactors and advanced SMRs.
  • Romania has a plan to double its nuclear power capacity, which already supplies about 19% of the country's energy, by 2031, by adding two units at its Cernavoda reactor site.
  • France, which had in the past expressed an interest in phasing out nuclear energy, now plans to extend the life of existing plants and build up to six new reactors, according to statements from the government of President Emmanuel Macron. More than 75% of France's existing power generation is nuclear.
  • Belgium had a plan to close all of its seven plants by 2025, but it's decided to extend licenses for 10 years.

It's not just Europe, as Brazil, which relies on hydropower for about 60% of its annual electricity supply, signed an agreement in January to find a site for a third large reactor, Jones said.

"South Korea was going to phase out nuclear power, but the newly elected government has committed to build new plants—and it was an issue in the election," Jones said.

Public discussion during an election of nuclear's benefits occurred in France as well as South Korea, Jones said, and it's helping proponents to explain its advantages.

"People are learning more about nuclear and its economic value proposition, and they are looking at nuclear … for what does it enable us to do?" he said. "If it allows you to retire coal plants faster and meet decarb goals sooner and cheaper … then people assess it this way. They're not satisfied with continuing to rely on fossil fuels."

Industrial development strategy too

For the UAE, nuclear power also offers not only a way to reduce domestic gas use—and possibly become an LNG exporter—but also a pathway to producing a slate of clean energy and "green" aluminum that it can sell internationally at a premium, S&P Global explained.

EWEC is offering quarterly auction certificates of clean nuclear and renewable electricity, qualified under the international Renewable Energy Certificate (REC) program, it said.

Already RECs have been purchased by ADNOC, the country's national oil company, and Aldar, a large real estate portfolio manager in the UAE. Emirates Global Aluminium announced in April that it is working on a deal with ENEC to source 100% clean power, supporting its "CelestiAL" brand.

Posted 21 April 2022 by Kevin Adler, Chief Editor

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.


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