NUCLEAR AND RENEWABLES: THE BEST OF BOTH WORLDS

Ferdinand Varga, Managing Director and Senior Partner, Boston Consulting Group (BCG) and Frederik Jobert, Managing Director and Senior Partner, Boston Consulting Group (BCG) assess the immense value that can be unlocked by a combination of nuclear and r

As the Middle East looks ahead to the coming decades, respective leaderships are bound by a situation that requires both the utmost attention and unprecedented action – the deepening climate emergency.

Because electricity production, deforestation, mass transportation, and the burning of fossil fuels have increased dramatically, such activities have collectively propelled the community closer than ever to a catastrophic scenario where the planet’s climate system experiences irreversible damage.

Compelled to provide the world with a clear picture of the approaching turbulence, this concerning outlook was recently substantiated by the Intergovernmental Panel on Climate Change (IPPC).

In its latest report, the United Nations body for assessing climate change-related science warned that limiting global warming close to 2 degrees Celsius above pre-industrial levels will be unattainable in the next 20 years without immediate large-scale Greenhouse Gas (GHG) emissions reductions.

It is without a doubt that the urgency and speed needed to decarbonize the electricity sector given its importance and it should be a top priority.

With such efforts now an imperative rather than an eventuality, alternative fuel sources are key to success, looking beyond energy transition but a complete rehaul of the power mix where clean electricity is required to decarbonize other sectors such as mobility, heat, and hydrogen.

The emphasis of these decarbonisation efforts lies with alternative fuel sources – including renewables and nuclear.

Energy derived from renewables is generated from natural processes that are continuously replenished and incapable of emitting carbon dioxide (CO2), thus making them prudent for combatting climate change issues.

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In the International Energy Agency’s pathway to net-zero, almost 90 percent of global electricity generation will come from renewables by 2050, with solar PV and wind accounting for the majority.

Nuclear is too is a zero-emission clean energy source and generates electricity without the harmful byproducts emitted by fossil fuels. Historically, emissions of the power sector globally have grown 2 percent CAGR over the last 30 years, however, the global scenario by 2040 is set to change with a reduction in emissions by 6.7 percent.

According to the IEA Sustainable Development Scenario, nuclear is expected to play a key role in power generation by 2040, amounting to 11 percent in the power mix.

THE DIFFERENTIAL PERSPECTIVE

While the world has grown to acknowledge and adopt renewables into the energy mix, there is a differential viewpoint on nuclear.

“Can nuclear play a key role in decarbonisation efforts and should it?”

The fact is, opposing arguments to this question do not serve the general interest of

12 decarbonisation efforts and instead slows down the actuality of a radical change, which is required.

It is known that renewables are built everywhere today, and having a one hundred percent renewable power system is possible, however in our view, it is not sustainable as a significant dispatchable capacity of power generated is required for the generation of power at scale.

Also, while nuclear do pose significant nonclimate related environmental issues, so do renewables – such as land use and challenges to wildlife – applicable to several types of renewable energy sources.

Therefore it is important to appreciate that cost-efficiency, accessibility, and carbon intensity are all factors that countries do and will consider when opting for energy sources, and there is no single power generation technology that meets all of these requirements.

At BCG, we concur that a combination of both nuclear and renewables will have a key role in reaching a 2 degrees Celsius path at a global level – and the Middle East is primed to contribute through notable groundbreaking projects.

REGIONAL RENEWABLES AND NUCLEAR ADOPTION OUTLOOK

In line with governmental direction, alternative energy sources adoption is now a fundamental component of national strategies across the Middle East, with successfully reducing GHG emissions and honoring climate change commitments becoming overarching priorities.

For example, as per Saudi Arabia’s Vision

2030 and the strategic National Renewable Energy Program (NREP), the country aims for 50 percent of national electricity demands to be ascertained through renewables and nuclear by the decade’s conclusion.

Dumat Al Jandal, the Kingdom’s first wind farm projected, is scheduled to be completed in 2022, while ‘The Line’ smart city project will also be 100 percent renewables dependent.

Similarly, in the UAE, the Energy Strategy 2050 aims to increase clean energy contributions in the total energy mix from 25 percent to 50 percent, combining renewables, nuclear, and clean energy sources to accommodate economic requirements and environmental objectives.

One project certain to support the agenda is the Barakah nuclear power plant, which is the first of its kind in the UAE. With the first of the four APR1400 units already operational, projections indicate they will produce 25 percent of the country’s electricity when completed.

Moreover, the Al Dhafra solar power plant will become the world’s largest single-site solar plant when commercially operational in 2022, reducing CO2 emissions in Abu Dhabi by no fewer than 2.4 million metric tons per year.

Elsewhere in the region, Bahrain and Oman are pursuing projects to achieve sustainability and provide mitigating climate change.

The Al Askar independent power plant currently under construction in Bahrain has been commissioned to generate 100 MW through solar power and achieve almost 50 percent of the target outlined by the National Renewable Energy Action Plan (NREAP) – which aims to bring 225 MW of photovoltaics (PV) online by 2025.

Meanwhile, Oman is pursuing multiple wind and solar projects in line with Vision 2040, with projects in Duqm, Manah, and Dhofar set to be completed over the coming three years.

Collectively, these developments will bolster Middle Eastern climate change contributions, positioning the region and nations within as leaders in renewables adoption.

A NECESSARY COMBINATION FOR REFORM

For the Middle Eastern governments, renewables and nuclear will be a key contributing factors in efforts to both cut GHG emissions, drive sustainability, and limit global warming gain traction while growing increasingly important in the years ahead.

The IPCC report highlights the precarious predicament facing the global community, and the Middle East is strongly positioned to help drive global warming limitation to 2 degrees Celsius when such projects are fully operational, backed by the capabilities and value that these practical energy sources embody.