Small reactors, big opportunity for MENA8 October 2019
The Middle East and North Africa region is typically known for its oil and gas, but as Ian Jackson explains, smaller nuclear reactors have the potential to drive economic growth in the region over the next decade.
According to the World Bank, economic growth in the Middle East and North Africa (MENA) region has been steadily rising. Gross domestic product (GDP) will grow by 1.5-3.5% per year between 2019 and 2021. MENA economies could be growing by at least twice this rate during the next decade, making the region an ideal market for small nuclear reactors to power emerging high technology industries and cities.
Electricity demand is high. At the current trajectory, peak electricity demand is set to reach 120GWe in Saudi Arabia alone by 2030 — about double that of the UK today. Small nuclear power could be transformative. The localised manufacture and deployment of small modular reactors (SMRs) has the potential to catalyse the MENA region’s economies, creating new high technology industries, embedding scalable electrical power generation within the decentralised urban smart grids of new Arabian cities; allowing seawater desalination for drinking water supplies; and providing industrial process heat and offering global export potential.
Although MENA has an abundance of natural solar energy, compared with an advanced SMR nuclear energy programme, solar technology exports are much less sophisticated, with fewer technological benefits and slimmer profit margins. In any case China, already the world’s leading producer of solar energy, dominates the solar electricity market with mass-produced cheap photovoltaic (PV) panels.
Civil nuclear energy is a successful and growing part of the Arab world’s energy economy. Four Korean APR1400 units are under construction in Abu Dhabi in the United Arab Emirates, with the first unit expected to begin operation in 2020. Saudi Arabia is nearing completion of its first nuclear research reactor near Riyadh, supplied by INVAP of Argentina. Iran began operating its Russian-supplied VVER-1000 unit at Bushehr in 2013.
Jordan is likely to follow with a small modular reactor. Jordan occupies an influential position within MENA, because it has its own natural uranium deposits suitable for open pit mining. Jordan has signed SMR cooperation agreements with China National Nuclear Corporation, Rolls-Royce, NuScale, X-energy and Rosatom.
These projects are not simply about supplying cheap electrical baseload power or Middle Eastern geopolitics. They are part of a much wider cooperative industrial strategy stretching across the Arab world to provide highly skilled science, technology, engineering and mathematics jobs and to diversify economic development beyond the traditional oil sector.
The gross value added (GVA) to MENA economies from a nuclear programme is potentially very high. In December 2017, an analysis by the UK Nuclear Industry Association and Oxford Economics indicated that the productivity of UK nuclear sector workers is US$130k GVA per employee. Nuclear employees are within the top 10% of the most productive workers in the UK economy. The UK nuclear sector created $8 billion of GVA in 2016 from 65,790 nuclear workers. This high productivity reflects both the highly-skilled nature of the civil nuclear workforce, and the intensive use of advanced technologies to add value.
Research by Jackson Associates indicates that a cyber-physical ‘industry 4.0’ advanced manufacturing plant located in MENA producing 100 SMR units (10 units per year) could potentially create 1500 advanced manufacturing jobs and 6000 nuclear jobs, and would contribute $12 billion GVA to the regional economy through MENA regional sales and exports to Western countries.
Saudi Arabia’s Vision 2030 plans to achieve 30-50% of local content for its nuclear programme. This is both realistic and achievable for factory manufactured SMRs, which could have rates of 90% local content produced within MENA (or 100% including fuel supply).
It is more difficult to localise larger nuclear power plant builds than SMRs. The locally manufactured content of the Korean-supplied Barakah nuclear power plant in UAE has been reported by industry sources to be only 5% for the first unit, although this should increase for the three follow-on units built in the UAE and the wider MENA region. Similarly, China already supplies 86% of the content of its Hualong One HPR1000 reactor export technology, with only 14% manufactured in the buyer country. A collaborative SMR nuclear programme developed jointly between Saudi Arabia, Jordan and the UAE could be the best option to boost shared technological and economic growth within MENA, maximising locally produced nuclear components and nuclear safety class qualified equipment.
Advanced fuel cycle development
For true energy independence, nuclear fuel cycle facilities are needed. Localised nuclear fuel facilities in MENA would assure supply to SMR buyers and avoid the political temptation for foreign governments — notably China, Russia and the USA, who all heavily influence the uranium market — to restrict or potentially disrupt enriched uranium supplies to MENA states for domestic policy reasons.
The International Atomic Energy Agency’s 90t low enriched uranium (LEU) fuel bank, scheduled to open in Kazakhstan later in 2019, hedges some of this political risk. But security of supply remains a concern for MENA buyers, not least because of past experience: in 1974 France locked Iran out after the latter invested $1 billion in a 10% stake in Eurodif’s Tricastin uranium diffusion enrichment plant.
Political risks to Arab nuclear fuel supply remain high. Today US economic sanctions imposed on Iran by President Trump are biting hard. They follow the US decision to unilaterally withdraw from the Iran Nuclear Deal agreed by President Obama in July 2015.
Nowadays most major civil nuclear reactor vendors have direct access to uranium enrichment facilities in their home countries; China, France, India, Japan, Russia, the USA and the UK all have domestic enrichment capabilities. Canada does not have enrichment plants, mainly because its CANDU nuclear reactor technology operates using natural uranium and the lack of Canadian enrichment facilities might ultimately hold back Canada’s ambitions to enter the global SMR market without American help supplying enriched fuel. Similarly, despite South Korea’s extensive nuclear energy infrastructure and technological base, South Korea does not have independent means of uranium enrichment, which weakens its position in the SMR marketplace.
If MENA aims to become a global manufacturer and exporter of SMR nuclear technology then a Middle Eastern nuclear fuel enrichment plant and a fuel fabrication plant are necessary to supply customers alongside an SMR factory fabrication facility. From a practical standpoint, local nuclear fuel enrichment and fabrication facilities are necessary because some SMRs are sealed-for-life designs. The fuel can be pre-loaded at the factory, significantly reducing safety, security and nuclear proliferation risks. The SMR supplier maintains strong cradle-to-grave control over end-user buyers, ideally with a take-back arrangement for disposing of SMR spent fuel. From a commercial standpoint, the credibility of an SMR vendor depends upon its ability to supply both the reactor technology and the nuclear fuel for the reactor during its lifetime. An SMR reactor design will typically operate for 25 to 30 years at 50-100MWe. Buyers would probably not take the risk of procuring an SMR without strong contractual arrangements to supply nuclear fuel for the full lifetime of the reactor unit, backed up by supporting government agreements and assurances from the vendor government within MENA.
In order to develop a forward-looking state-of-the-art SMR manufacturing programme, it makes sense to adopt the most advanced technology available across the fuel cycle. Laser enrichment is potentially much cheaper and more efficient than gaseous diffusion and gas centrifuge techniques used by existing players. According to Nature next-generation SILEX laser enrichment could potentially reduce uranium fuel supply costs by 80%. Closely monitored by the United Nations’ international system of transparent and comprehensive IAEA Safeguards Inspections, SILEX technology would be a natural choice to accompany an SMR-based nuclear programme within MENA. SILEX remains the only privately held technology that is classified by the US government under its US Atomic Energy Act. SILEX technology will shortly be 51% owned by Australian technology company Silex Systems Limited and 49% owned by Canadian company Cameco Corporation, subject to final agreement by the US Department of Energy.
Benefits and safeguards
The nuclear energy outlook for MENA is promising. Large scale nuclear power plants are already under construction, supplied by foreign vendors. However smaller nuclear power plants offer genuinely transformational opportunities to locally develop advanced nuclear industrial infrastructure within the MENA region with a high percentage of locally manufactured content.
An SMR collaborative robotic manufacturing plant, SILEX fuel enrichment plant and fuel fabrication plant could generate at least 7500 highly skilled jobs creating $12 billion GVA for the regional economy.
Investment and development of SMR advanced nuclear plants could be shared between Member States of the Gulf Co-Operation Council to provide energy security and energy independence for the whole MENA region, without the risk of future supply interruptions or disruptive economic trade sanctions.
Nuclear safety and security must always remain paramount. A comprehensive system of independent Safeguards Inspections by the International Atomic Energy Agency under the 1968 Nuclear Non-Proliferation Treaty would provide strong geopolitical assurance and public confidence in the peaceful intentions of the MENA nuclear energy programme.