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Artificial intelligence (AI) is becoming an increasingly important factor in the progress of the civilian nuclear programmes in the UAE and Saudi Arabia.

Last week, it was reported that the UAE is considering starting the tendering process for the next phase of its nuclear power plant project this year, following the completion of fuel loading on the fourth and final reactor of the Barakah nuclear power plant in Abu Dhabi.

When fully operational, the Barakah plant's four reactors will contribute a total of approximately 5,600MW of power-generation capacity to Abu Dhabi's existing fleet, or about 25% of its total installed generation capacity.

Some note that the planned expansion is frivolous, given the ongoing expansion of renewable energy and gas-fired generation capacity in Abu Dhabi, and the jury still out on the economic feasibility of electricity exports.

The story is quite different in Saudi Arabia, where plans to procure the kingdom's first large-scale nuclear power plant have been hamstrung by complicated regional and global geopolitics.

The project remains firmly on the table, however, not least due to Riyadh's strategy to diversify the kingdom's energy sources and industries, and as a potential military option to counter regional rival Iran's nuclear programme.

No contradiction

One US-based energy expert says she does not see a contradiction in the ongoing expansion of gas, renewable and nuclear power generation capacity in the region.

Power demand is accelerating across the Gulf, says Karen Young, senior research scholar at Columbia University's Centre on Global Energy Policy.

"Gas-fired plants will help baseload in some places and correlate to new gas production goals that are really more about chemicals production, too. Nuclear is useful for excess power as an export, but also to meet the enormous demand expected from AI and data centres," Young tells MEED.

She also notes that nuclear power's obvious security links with such facilities have become prestigious power projection tools for the Gulf states.

Crucially, the development of all energy sources underpins the preferred pragmatic energy transition approaches of most Gulf states.

The region's need to decarbonise existing hard-to-abate industries, from oil production to refinery and downstream industries, will require a large amount of clean energy, including nuclear power.

So far, the most overlooked factor has been the demand for power coming from AI and data centres, which while still in their early days, are nevertheless expected to play a key role in enabling the productivity of people and assets across the Gulf.

Artificial intelligence

Over the past few years, both the UAE and Saudi Arabia have made – and attracted – significant investments in AI and data centres as they anticipate increased industrial competition in the post-oil era. 

In April, a $1.5bn investment by US-based Microsoft in Abu Dhabi’s G42 was announced, with Brad Smith, vice chair and president of Microsoft, joining the G42 board of directors.

The partnership entails G42 running its AI applications and services on the Microsoft Azure cloud computing platform and partnering with the US firm to deliver advanced AI solutions to global public-sector clients and large enterprises.

The two companies also agreed to work together to bring advanced AI and digital infrastructure to countries in the Middle East, Central Asia and Africa.

Sam Altman, the chief executive of OpenAI – the company that developed ChatGPT – has visited Abu Dhabi twice since June and, according to a report by the Financial Times, is in early talks with MGX, Abu Dhabi’s newly launched AI investment company, which aims to build $100bn in assets under management within a few years.

MGX has the backing of Abu Dhabi’s sovereign wealth fund Mubadala and G42, with which OpenAI has partnered to develop sector-focused AI.

It is understood that Altman has been in talks with the world’s largest investors to raise trillions of dollars to expand the global production of graphics processing units crucial for training and running large-language models like those that power ChatGPT, Microsoft CoPilot and Google Gemini.

In addition to forming an AI subsidiary, Saudi Arabia’s Public Investment Fund has created Alat, a $100bn technology and semiconductor vehicle. Alat aims to manufacture more than 30 product categories, including robotic systems, communication systems, advanced computers and digital entertainment products, as well as advanced heavy machinery used in construction, building and mining.

Both Saudi Arabia and the UAE have also booked separate orders for thousands of H100 processors from US technology firm Nvidia. The processors, which cost $40,000 apiece, are crucial to building and running AI projects and applications.

"Investing in AI is a sensible initiative," says a transaction advisory and finance expert. "Things like electric vehicles and data centres, along with industrialisation and urbanisation… all that needs electricity."

The Dubai-based expert says that AI has shown great promise when it comes to improving productivity and quality, which are both essential as the world heads towards peak population, which it is projected to reach by 2100 – and "specifically for Saudi Arabia, where they need methods for improving local population productivity".

Power guzzler

The amount of power that will be required by the AI ambitions and other industrial initiatives of Saudi Arabia and the UAE remains difficult to quantify at present.

What is clear is that both countries will need enough clean energy to power their legions of data centres and the digital infrastructure required by AI, if they are to ensure that the technology does not get in the way of achieving their net-zero objectives. 

For the UAE, at least, which is a US security ally, there is a strong parallel to be drawn between its nuclear and AI strategies.

In November 2022, the UAE and the US signed a partnership agreement that aims to catalyse $100bn in financing and other support, in addition to deploying 100GW of clean energy – including nuclear power – in the US, UAE and emerging economies around the world by 2035.

The recent AI investment by Microsoft in G42 carries a similar tone, which involves delivering advanced AI and digital infrastructure in their respective countries and other markets.

Notably, the UAE is one of the 20 countries that committed to tripling global nuclear energy capacity by 2050 at the UN climate change conference Cop28.

The UAE has also made clear its intention to become an investor in – and developer of – nuclear power plants abroad, which not only supports its economic and net-zero objectives, but also helps boost power projection abroad.

From this vantage point, it is clear that the UAE's plan of expanding its nuclear portfolio at home serves important interests beyond meeting domestic power demand.

Riyadh must feel the need to catch up.

MEED's April 2024 special report on the UAE includes:

> COMMENT: Non-oil activity underpins UAE economy
> GVT & ECONOMY: Non-oil activity underpins UAE economy
> BANKING: UAE banks seize the moment
> UPSTREAM: Adnoc oil and gas project spending sees steep uptick
> DOWNSTREAM: UAE builds its downstream and chemical sectors
> POWER: UAE marks successful power project deliveries
> WATER: Dubai tunnels project dominates UAE pipeline
> DUBAI CONSTRUCTION: Dubai real estate boosts construction sector
> ABU DHABI CONSTRUCTION: Abu Dhabi makes major construction investments