Powering the Future

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As Abu Dhabi's leadership visited Washington to solidify US support for their nuclear power plans, government officials in the emirate delayed the tendering of the project in order to give bidders more time.

Abu Dhabi's Crown Prince Sheikh Mohamed bin Zayed Al Nahyan travelled to the American capital to meet with senior US officials, including President Barack Obama and the secretary of state, Hillary Clinton.

The UAE needs the green light from the US in order to use American companies and technology in its plans to build a series of nuclear power reactors. Following positive feedback from Washington, the "123 agreement", named after Section 123 of the US Atomic Energy Act, is expected to pass through Congress around mid-October, unless the unlikely event of Congressional action blocks it.

Given that there is already American participation in the bidding process via a consortia including General Electric, it stands to reason to expect American support, especially given the gloomy economic situation in the US.

The winner of the contract to build and operate the planned series of nuclear power stations was supposed to be announced on Wednesday the 16th of September. However, it was leaked to local press that government officials are taking extra time in order to allow all three bidders to continue with the process. 

A diplomatic source close to the deal told local press, "It'll take a long time because they continue to have three candidates."

The decision to hold off was based on the fact that the three bidding consortia of firms - from France, South Korea, Japan and the US – were so closely matched. Each bid's application is being judged on the skills they bring to the table, these include technology, cost-efficiency and deliverability.

From the government's perspective it would appear the delay is actually good news. Robust competition amongst the bidders usually results in the state client receiving value for money.

A little over 12 months ago, it would have been a very different story. Contractors held all the cards as clients struggled against perennial shortages of experienced builders, soaring costs and a lack of manpower.

Nowadays, though, the capital is in the fortunate position to maximise the value of any contracting deals by taking advantage of falling material and engineering costs, as well as getting the most out of eager contractors.

By the same token, the global economic slowdown has actually acted as an impetus for financially robust governments, such as Abu Dhabi, to ramp up power production while it is cost efficient to do so. Another reason for the emirate, however, is its burgeoning population.

According to Abu Dhabi's Department of Economic Development, between 2002 and 2007 the emirate's population grew at an average annual rate of 4.8%. This number leapt even further for the years 2005-08, with growth figures averaging 6-7%. Owing to this rapid population growth an increasing strain has been put on energy supply.

Annual peak demand for electricity in the UAE is likely to rise to more than 40,000 MW by 2020, a cumulative annual growth rate of about 9% from 2007. Current capacity committed to domestic electricity generation can only match about 50% of that amount, creating understandable concern over shortages.

It is for this reason that the atomic strategy, which is the largest construction contract in the history of the country, worth $41bn, is on the cards.

Policymakers see nuclear power as the solution. When the project is finished in 2017 it is expected that nuclear power will generate up to one-third of the country's electricity requirements.

Before of any of that can happen, though, Sheikh Khalifa bin Zayed Al Nahyan, the president of the UAE, is expected to announce his approval of a new law that will endorse the country's nuclear regulatory body officially.

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