7 ELECTRICITY SECTOR DEVELOPMENTS IN EGYPT …
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an agreement with the Egyptian government for the construction of
the plant. 59 In addition to financing and construction, Russia’s support
is likely to include fuel supplies, storage of waste, training, and other
nuclear technology-specific expertise. 60 In March 2019, the Nuclear and
Radiological Regulatory Authority issued a siting permit for project, an
important step, which confirms that the site meets domestic and international stipulations. 61 As such, construction is scheduled to begin in 2020
with the plant becoming fully operational by the end of the decade.
Project Cost
The 4,800 MW project envisages four 1,200 MW nuclear reactors at
a cost of $30 billion, with $25 billion financed through Russian loans
and $5 billion undertaken by the Egyptian government. 62 While nuclear
power will help meet the nation’s baseload demand with a reliable and
carbon-free energy source, the project presents challenges in terms of its
development and cost.
The project is more expensive than other megaprojects and electricity
capacity additions in Egypt in recent years, partially due to the high fixed
costs associated with nuclear development in general, but also as a result
of abundant natural gas resources and favorable renewable conditions.
The nation currently enjoys a rapidly growing renewable energy sector
and access to extensive natural gas resources, including the Zohr gas field.
Discovered in 2015, Zohr is the largest gas field discovery made in the
Mediterranean Sea and began producing in less than 3 years from the
announcement of its discovery. The success of the Zohr field to date and
Egypt’s natural gas sector reforms are likely to continue to provide further
impetus to sector development. Given Egypt’s indigenous gas and renewable energy resources, these solutions are more cost-effective options in
meeting Egypt’s electricity supply needs when compared with a major
nuclear power plant. Still, future major gas discoveries in Egypt are not
guaranteed, nor is Egypt’s ability to maintain its net exporter status in gas
beyond the mid-2020s.
For example, the 14,400 MW gas-fired combined cycle project
completed in 2018 resulted in total spend of approximately $7 billion,
almost 3 times the capacity of the DNPP, for less than a quarter of the
cost. While the marginal generation costs associated with natural gas electricity production are higher than those of nuclear generation, the DNPP
is still likely to represent a substantial economic burden for Egypt given
203
an agreement with the Egyptian government for the construction of
the plant. 59 In addition to financing and construction, Russia’s support
is likely to include fuel supplies, storage of waste, training, and other
nuclear technology-specific expertise. 60 In March 2019, the Nuclear and
Radiological Regulatory Authority issued a siting permit for project, an
important step, which confirms that the site meets domestic and international stipulations. 61 As such, construction is scheduled to begin in 2020
with the plant becoming fully operational by the end of the decade.
Project Cost
The 4,800 MW project envisages four 1,200 MW nuclear reactors at
a cost of $30 billion, with $25 billion financed through Russian loans
and $5 billion undertaken by the Egyptian government. 62 While nuclear
power will help meet the nation’s baseload demand with a reliable and
carbon-free energy source, the project presents challenges in terms of its
development and cost.
The project is more expensive than other megaprojects and electricity
capacity additions in Egypt in recent years, partially due to the high fixed
costs associated with nuclear development in general, but also as a result
of abundant natural gas resources and favorable renewable conditions.
The nation currently enjoys a rapidly growing renewable energy sector
and access to extensive natural gas resources, including the Zohr gas field.
Discovered in 2015, Zohr is the largest gas field discovery made in the
Mediterranean Sea and began producing in less than 3 years from the
announcement of its discovery. The success of the Zohr field to date and
Egypt’s natural gas sector reforms are likely to continue to provide further
impetus to sector development. Given Egypt’s indigenous gas and renewable energy resources, these solutions are more cost-effective options in
meeting Egypt’s electricity supply needs when compared with a major
nuclear power plant. Still, future major gas discoveries in Egypt are not
guaranteed, nor is Egypt’s ability to maintain its net exporter status in gas
beyond the mid-2020s.
For example, the 14,400 MW gas-fired combined cycle project
completed in 2018 resulted in total spend of approximately $7 billion,
almost 3 times the capacity of the DNPP, for less than a quarter of the
cost. While the marginal generation costs associated with natural gas electricity production are higher than those of nuclear generation, the DNPP
is still likely to represent a substantial economic burden for Egypt given