As Iran’s nuclear program inches closer to international acceptance, a number of countries — Saudi Arabia, Turkey, Jordan, Algeria and Egypt — are in various stages of planning the construction of nuclear power reactors. The most ambitious among these is Saudi Arabia, from which many in the nuclear industry are hopeful of profiting. Despite this strong push, nuclear power makes little economic sense for these countries, and they would be much better off investing in solar power, because it is rapidly become cheaper and it is especially appropriate for regional electricity demand patterns.

The stated arguments for nuclear construction are familiar. An April 2010 Saudi royal decree stated, “The development of atomic energy is essential to meet the kingdom’s growing requirements for energy to generate electricity, produce desalinated water and reduce reliance on depleting hydrocarbon resources.” Another argument that is sometimes offered is economic competitiveness with fossil fuels. A comparison of electricity generation costs from nuclear reactors, natural gas-based power plants, solar energy from photovoltaic cells and concentrated solar power stations reveals, however, that unless natural gas prices rise dramatically, gas will remain the cheapest source of energy.

Nuclear electricity would be more than twice as expensive as gas for the simple reason that constructing a nuclear reactor is extremely costly, both in absolute terms and on a per unit cost basis. Electricity from gas would continue to be cheaper even if a relatively high carbon cost — even above $150/ton CO₂ in some scenarios — were imposed. This large cost difference also negates the argument about the foregone opportunity cost from Middle Eastern countries consuming natural gas resources instead of exporting them. In reality, when the costs of liquefying and shipping these resources are taken into account, a country like Saudi Arabia would have to be assured that natural gas prices will rise to and stay well above the current and historical global average for decades, before it becomes a sound economical choice for it (and other natural gas-producing countries) to replace a natural gas plant with a nuclear reactor. The downward pressure caused by US shale gas expansion makes it unlikely that natural gas prices will reach the high levels needed to make nuclear power economical anytime soon.

The argument about lost opportunities does hold for oil. It makes good economic sense to shut down oil-based power plants and replace them with nuclear reactors or natural gas. Saudi policymakers may have already realized this, as nearly 100% of installed capacity in recent years is based on natural gas.