Nuclear power in the GCC

Huse believes nuclear power can be a tricky proposition.
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Steps to go nuclear

Huse says the first step along the way to becoming nuclear powered is to become a member of the IAEA as a nation.

“Then you have to sign up to a series of international treaties,” he said. “The first of these is the Non-Proliferation Treaty – which outlines that the signatory will  do everything to avoid the proliferation of nuclear weapons.”

“The signatory state then signs MoUs with potential supplier states, such as Russia, France or the US.”

Huse suggests that a nuclear power checklist start with a projected energy generation demand study and an examination of potential energy sources. Next is the process of joining the international nuclear community through the frameworks and treaties mentioned above. Draft domestic nuclear laws need to be examined and environmental impact studies carried out. There should also be an operational and risk management framework.

“Nuclear is hard for a number of reasons,” said Huse. “First there’s the regulatory regime to get in place. Then you need to find a site. That site then needs licensing. In most developed countries people don’t like to have nuclear power stations in their back garden. The site selection can be very difficult, so what tends to happen is that new nuclear power stations tend to be put next to existing ones.”

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The cost of nuclear can be prohibitive and in most cases it takes significant state backing and the ultra long term view that only a government can offer.

“A nuclear power plant is an expensive beast,” said Huse. “The CAPEX on a nuclear power plant is substantially higher than the alternative options. That’s a very topical issue at the moment because the financing of these projects isn’t as easy as it once was. There has never been a project-financing of a nuclear power plant.

“There are two possibilities to financing a nuclear power project in the Middle East: either local government would provide cash-finance, or it could be financed privately, but backed by some sort of government guarantee.

“That should be relatively straightforward for the countries which have a great deal of oil and gas in the region. Abu Dhabi, for example, has an incredible ability to finance projects.”    

IWPP expertise

Freshfields has worked on Al Hidd and Al Durr Independent Water and Power Projects (IWPP) in Bahrain. The project agreements for the development of Al Dur were signed last year by the Bahrain Ministry of Finance.

With an estimated value of more than US $2 billion, the project is the largest of its kind in the Kingdom of Bahrain. It will be located at Al Dur on the south-eastern coast of Bahrain and developed on a BOO (build, own, operate) basis.

The new project will generate a power capacity of 600 MW by June 2010. The remainder of the power plant and the desalination plant will be operational in June 2011, with a capacity of 1,200 MW of power and 48 million imperial gallons per day (MIGD) of water, making the overall capacity of the national network 4,000 MW of power and 191 MIGD.

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