204 M. HOCHBERG
its high investment cost. With interest rates of 3%, the Russian loans
include favorable terms, yet would add to Egypt’s growing external debt.
However, developing gas or renewable resources also implies costs for
Egypt, either through sovereign debt, increased taxation or higher electric
rates. In the case of debt, interest would likely accrue at rate of approximately 5.75%, Egypt’s Eurobonds yield. While the Russian loans provide
better interest rate terms, the absolute amount paid to finance the nuclear
project would likely be greater, due to the high capital costs of nuclear.
Compatibility with Renewables
In addition, conventional nuclear technology is not particularly compatible with electric systems that enjoy high levels of renewable penetration.
Nuclear plants are inflexible, meaning that they have little capability to
quickly ramp output up or down, and typically run with little to no
variation in output, providing baseload generation. As renewable output
depends on weather conditions, inflexible nuclear capacity would likely
prohibit renewable generation from delivering electricity to the grid,
particularly under certain circumstances.
Justifications for the Project
As a result of the supposed weak economic case for the project, the
DNPP’s perceived value also stems from fostering nationalism and popularity at home, and its utility in gaining an edge and hedging bets in
geopolitics and relationship building abroad. Egypt seeks to deepen ties
with more international players as the world becomes increasingly globalized and multipolar, and the internal politics of longtime allies and aid
benefactors, such as the United States, are increasingly unpredictable. In
addition, given criticism against the Sisi administration’s human right’s
record, Egypt may see value in deepening ties with allies that are less
likely to require that financial assistance be partially dependent on Egypt’s
domestic affairs. Egypt also received offers for the nuclear project from
China and South Korea prior to selecting Russia.
its high investment cost. With interest rates of 3%, the Russian loans
include favorable terms, yet would add to Egypt’s growing external debt.
However, developing gas or renewable resources also implies costs for
Egypt, either through sovereign debt, increased taxation or higher electric
rates. In the case of debt, interest would likely accrue at rate of approximately 5.75%, Egypt’s Eurobonds yield. While the Russian loans provide
better interest rate terms, the absolute amount paid to finance the nuclear
project would likely be greater, due to the high capital costs of nuclear.
Compatibility with Renewables
In addition, conventional nuclear technology is not particularly compatible with electric systems that enjoy high levels of renewable penetration.
Nuclear plants are inflexible, meaning that they have little capability to
quickly ramp output up or down, and typically run with little to no
variation in output, providing baseload generation. As renewable output
depends on weather conditions, inflexible nuclear capacity would likely
prohibit renewable generation from delivering electricity to the grid,
particularly under certain circumstances.
Justifications for the Project
As a result of the supposed weak economic case for the project, the
DNPP’s perceived value also stems from fostering nationalism and popularity at home, and its utility in gaining an edge and hedging bets in
geopolitics and relationship building abroad. Egypt seeks to deepen ties
with more international players as the world becomes increasingly globalized and multipolar, and the internal politics of longtime allies and aid
benefactors, such as the United States, are increasingly unpredictable. In
addition, given criticism against the Sisi administration’s human right’s
record, Egypt may see value in deepening ties with allies that are less
likely to require that financial assistance be partially dependent on Egypt’s
domestic affairs. Egypt also received offers for the nuclear project from
China and South Korea prior to selecting Russia.