Introduction

In a 2006 summit meeting in Riyadh, the leaders of the six Gulf Cooperation Council's (GCC) states collectively declared their intention of starting a joint nuclear energy development program. Since then, Bahrain, Kuwait, Oman and Qatar appear to have walked away from their nuclear plans in the wake of the multiple accidents at Japan's Fukushima nuclear plant. The UAE and Saudi Arabia, on the other hand, have continued with their nuclear plans, albeit at different paces. The first two units of the UAE's first nuclear power plant (Barakah) are currently under construction and, as of May 2014, are scheduled to be connected to the grid in November 2016 and 2017 respectively. Saudi Arabia has continued to reiterate its commitment to the acquisition of nuclear power and in May 2012, the King Abdullah City for Atomic and Renewable Energy (KA-CARE) projected that by 2032, out of a total 123 GWe of electricity generation capacity in the country, 18 GWe would be contributed by nuclear power.

Across the GCC, officials offer multiple motivations to construct nuclear reactors. Perhaps the most commonly articulated one is a desire to get away from the near-complete reliance on hydrocarbon resources to produce electricity and desalinate water. Such reliance is seen to lead to the depletion of national oil and gas reserves but is also perceived to have an opportunity cost associated with forgone export revenues. Others suggest that interest in nuclear power is also a response to Iran's acquisition of nuclear technology. It has been argued, for example, that, “GCC states want to show Iran, their own people, and the broader world that Arabs also have the prowess and power attributed to nuclear technology”. Whatever the motivations behind nuclear power might be, the acquisition of nuclear technology will entail major economic and non-economic costs.

This paper studies the potential role of nuclear power for the GCC countries, and compares the economics of generating electricity from nuclear reactors to alternate sources such as natural gas and solar energy. This analysis also considers the opportunity cost associated with using natural gas in comparison to nuclear power. While many of the GCC states are not pursuing nuclear power currently, our analysis would be applicable to them if they do so in the future.