SUN 30 - 4 - 2017
 
Date: Mar 2, 2015
Source: The Daily Star
Jordan’s bet on nuclear power is risky
Ali Ahmad

Nuclear power is a risky option for Jordan. Potential costs and time overruns added to growing public disapproval and emerging security threats represent serious risks that could force the Jordanian government to suspend or cancel the nuclear project. In such a scenario, the kingdom would incur substantial financial and reputational loses, while also missing out on opportunities to invest in increasingly promising renewable energy resources.

The rationale to invest in nuclear power in Jordan, as reiterated by the Jordan Atomic Energy Commission on many occasions, is primarily based on the need to achieve energy security and meet Jordan’s increasing demand for electricity and water. Jordan lacks indigenous fossil fuel resources and has suffered some major disruptions in its primary energy imports over the past few decades due to political turmoil in the region.

Beside the globally recognized economic disincentives of nuclear power such as high capital costs and lengthy construction times, Jordan’s economic and geopolitical profile pose added challenges that are either underestimated or completely overlooked by JEAC.

The allocation of economic risks depends on how the proposed nuclear power plant in Jordan will be financed and operated. JAEC estimates the cost of the project to be around $10 billion, with Jordan to cover 50.1 percent of the total cost and Russia’s Rosatom to join as an equity shareholder with 49.9 percent.

The proposed bilateral cooperation between Jordan and Russia is based on the Build-Own-Operate model, which aims to facilitate the acquisition of nuclear power in newcomer countries like Jordan with no adequate infrastructure, financial and human resources. 

It is not yet clear how Jordan would finance its nuclear project. In principle, Jordan can raise money from tax revenues or by borrowing from financial institutions. Given Jordan’s slim GDP and the fact that the tax revenue component of GDP has dramatically declined since 2008, reflecting Jordan’s government resistance to increase taxes, Jordan will likely seek loans from financial lenders. Borrowing substantial funds, however, is also challenging given Jordan’s weak credit rating, which would impact its ability to offer sovereign guarantees.

Another challenge is the size of Jordan’s electricity grid. Current generation capacity is about 3.4 gigawatts. Therefore, an addition of two large nuclear reactor units of about one gigawatt of power each would cover a large part of Jordan’s generation capacity, even after including the increase in electricity demand over the next decade. Such an addition would pose serious technical challenges related to grid stability. Moreover, a generation capacity increase of more than 10 percent would require grid upgrade, which in the case of Jordan could have a significant additional cost.

Based on past experiences, nuclear projects are not only susceptible to cancellation in the early stages of planning but many have been cancelled just before completion or even after completion. In a regulated electricity market such as is the case in Jordan, nuclear electricity will not have to compete against other electricity generation sources, benefiting from fixed pricing and long-term power purchasing agreements. 

However, other factors could potentially lead to the cancellation of the nuclear project: First, uncontrolled cost escalations due to under-bidding, construction delays and inflated infrastructure costs. If Jordan were to bear such escalated costs, wholly or partly, Jordan’s government could be forced to suspend the project due to insufficient funds and failure to secure further loans to support the project.

Second, large segments of the Jordanian public do not share the government’s enthusiasm for the nuclear project. The anti-nuclear sentiment has been growing due to the perceived mismanagement of the nuclear project. The political establishment in Jordan may find itself in a confrontation with the public over the nuclear project and may be forced to suspend the project to contain public anger. 

Third, the political chaos that surrounds Jordan, especially in Syria and Iraq, added to the increased presence of nonstate actors and terrorist groups in the region pose some serious security threats. Jordan’s government could be exposed to high internal and external political pressure to abandon its nuclear power project due to such threats.

Nuclear power in Jordan can also have operational risks. Reactors may require forced outages to remedy safety concerns. Unplanned outages are economically problematic and involve considerable costs due to substituting lost generation capacity.

Finally, there is a high risk that nuclear generated electricity will be more expensive than that generated by the combination of solar power and natural gas in Jordan. The estimates of how fast solar costs are expected to decline are striking. In other words, nuclear power may well have an opportunity cost if the costs of solar power continue to decline, as they likely will. 

Ali Ahmad, who holds a doctorate in nuclear engineering from Cambridge University, is a lecturer and research fellow in nuclear energy policy at Princeton University’s Program on Science and Global Security at the Woodrow Wilson School of Public and International Affairs. He is also a visiting lecturer in energy studies at the American University of Beirut. His work covers nuclear energy and climate change, nuclear security and nonproliferation and the introduction of nuclear power to new markets. He wrote this commentary for THE DAILY STAR.


 


A version of this article appeared in the print edition of The Daily Star on February 27, 2015, on page 7.


The views and opinions of authors expressed herein do not necessarily state or reflect those of the Arab Network for the Study of Democracy
 
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