The Middle East and North Africa sit at a crucial intersection of energy economics and security concerns. The region's growing populations and economies are using more electricity, and some key countries are seeking to diversify their electrical grids by reducing their reliance on generation fueled by oil and natural gas. Nuclear power factors in as a prominent part of the region's strategy to move away from fossil fuel. But advances in other energy technologies and the controversies surrounding Iran's nuclear program are complicating the regional pursuit of nuclear power. The U.S. withdrawal from the Iran nuclear deal and reinstated sanctions could push Tehran toward resuming its enrichment of nuclear fuel, sharpening questions about the justifications that other countries in the region use for pursuing nuclear power. While the desire to develop nuclear power in the Middle East and North Africa is alive and well, the associated costs, the rise of more affordable renewable alternatives, and security and proliferation concerns mean the window for the widespread development of nuclear energy there is slowly closing.
For nuclear power in the Middle East and North Africa, the implications of the U.S. withdrawal from the Iran nuclear deal and the regional responses to Iran's potential re-emergence as a nuclear power cannot be ignored. As regional powers seek to establish their own nuclear programs, the influence of alternative technologies will bring the political and security concerns associated with nuclear technology to the forefront.
A Tale of Two Uses
Nuclear technology has always had a civilian side and a military side. Clearly, there's a difference between a peaceful, civilian-led nuclear energy program and one used to develop nuclear weapons. But the civilian and military sides share processes that inextricably link them and that have profound security and proliferation implications. Countries with end-to-end nuclear programs — that is, programs that include processing, enrichment and reprocessing capabilities — may insist their intentions are peaceful, but the dual-use nature of the technology puts them closer to producing enough nuclear material to build a weapon should they decide to take that route.
Throughout much of the world, nuclear power is struggling to compete economically; the capital costs are high, and lengthy construction delays plague most ongoing nuclear projects. As storage technologies improve, and as the use of smart and distributed power grids increases, the argument countries make for why they want to develop a civilian nuclear program becomes weaker, raising questions about motives and making it even more difficult for them to justify to global powers the need for them to develop an end-to-end nuclear program. Political control over nuclear proliferation may be slipping as the Nuclear Nonproliferation Treaty weakens, but economic realities will help limit nuclear expansion just the same.
Demand on the Rise
The demand for electricity in the Middle East and North Africa is climbing, driven by rising population, economic growth, the increasing use of energy-intensive water desalination technologies and other factors. The German engineering and manufacturing conglomerate Siemens estimates that power demand in the Middle East will increase by more than 3 percent annually through 2035 and that the region will need to add more than 275 gigawatts of capacity — more than double what is now installed. To meet the rising demand, many nations in the region are undertaking expansion and modernization of their electrical grids with plans that stretch well into the second half of the century. The need to add electricity production capacity is coming at a time of technological flux and as a number of countries, including Saudi Arabia, Kuwait, Jordan and Lebanon, seek to diversify their power sectors away from oil-fueled generation as part of their own long-term efforts to ensure their future energy security.
While natural gas will remain the largest fuel source for electricity in the region, generation powered by renewables and nuclear is poised to play a more prominent role. Those two modes of power production don't directly compete in a traditional electrical grid, but advancing technology and changes in grid makeup will bring them into closer proximity.
When both capital costs and variable costs such as fuel are factored in, nuclear power generally struggles to compete economically with natural gas, wind and solar power — though it might make sense in some cases. Nuclear power's advantage is its ability to provide baseload power — it produces electricity at a constant, continuous level. Some other forms of generation — renewables, in particular — would need to be paired with storage or a baseload plant to meet demand on a constant basis.
Improvements in efficiency technologies, the declining cost of energy storage, the development of smart grids and the increased use of decentralized grids (especially in the developing world) will combine to minimize baseload requirements, leaving traditional nuclear power behind. While new technology, such as small, modular reactors, could play a role in making nuclear energy more competitive, the industry likely will be forced to play catch-up to some degree.
And though nuclear power's contribution to regional electrical grids is expected to rise over the next 20 years, its declining economic competitiveness means there is a narrow window for countries to exploit nuclear power's role in diversifying energy grids to support the development of domestic nuclear programs that may have a more nefarious dual use.
Renewables' Gain Could Mean Nuclear's Loss
As in much of the rest of the world, renewable energy in the Middle East and North Africa is becoming more affordable. In fact, some of the lowest solar energy costs in the world are in the Middle East. Both Saudi Arabia and the United Arab Emirates have ambitious solar power programs and are seeking to develop the industry domestically. Morocco, with cooperation from some Saudi companies, is also pursuing solar. Wind power also remains cheap for the region as a whole. Nuclear power programs, or at the very least the construction of nuclear power plants, are another way that many nations in the region are using to move their electricity production away from oil. Nuclear power projects are at various stages of development throughout the region, including in Egypt, Jordan, Saudi Arabia and the United Arab Emirates. The United Arab Emirates is the furthest along; though delays have plagued its construction, the country's first nuclear power plant is moving toward a start-up date in late 2019 or early 2020.
Resource-rich Saudi Arabia is also taking steps toward building out its own nuclear program. Many energy experts have identified it as the country in the region to watch with regard to nuclear development. As part of its sweeping reform program, Riyadh is experimenting with changing its energy mix, which overwhelmingly relies on burning natural gas and oil to generate electricity. Saudi Arabia is worried about its relationship with the United States as its oil influence declines. At the same time, the United States wants to keep a lever of influence over Riyadh, and nuclear aid is one way to do this. However, concerns over security motives are unlikely to abate, and once the nuclear-friendly administration of U.S. President Donald Trump leaves office, the nuclear power lever may not remain as attractive. As the economic argument for nuclear development loses its punch over the next 10 to 20 years, ultimately the breadth of the Saudi program will be a key indicator of U.S. willingness to accept the justification of peaceful programs.
At present, the nonproliferation treaty, which promotes the peaceful use of nuclear technology, appears to be weakening. With China and Russia willing to export nuclear technology and perhaps aid in the development of nuclear programs, and with the current White House supportive of nuclear development, countries like Saudi Arabia and the United Arab Emirates are seizing the moment to build their own programs. But as the viability of renewables and accompanying storage rises, nuclear's economic competitiveness is poised to decline. As the economic case for civil nuclear programs weakens, they will become politically more difficult to justify for purely peaceful purposes, especially if there are plans to privatize the grid.
Inherent security threats and proliferation risks will prompt close scrutiny of nuclear programs in the Middle East and North Africa. Countries that want to develop their own programs face a closing window of opportunity to do so, with the United Arab Emirates and Saudi Arabia best positioned to take advantage of the fading moment. While Egypt, Jordan and other countries may choose to pursue nuclear power on select occasions, they likely would do so by seeking help from Russia, China, the United States, Japan or South Korea, but any attempts to develop their own programs will face limits. As nuclear power's economic viability decreases, so will the effectiveness of a country's argument that it be allowed to pursue a nuclear program without the threat of international repercussions. And those repercussions likely will fall along already established lines of the great power competition. Looking beyond the next decade, the United States will be more likely to use the economic argument to push against the development of new nuclear programs, while China and Russia will fall back on highlighting the national prestige that nuclear programs can bestow on a country. Regardless of the economics, nuclear power as status symbol will retain its allure.