The government’s inaction on the handling of nuclear waste may hamper the effort to make nuclear power more widely available.
Energy security has emerged as one of the key priorities for the government. In the next two decades, nuclear energy is expected to contribute significantly to ensuring India’s energy security. At present, India generates about 4,100 Mw of nuclear power, which contributes only 3 per cent of India’s power generation. Generation capacity is expected to increase to 20,000 Mw by 2020 and to 63,000 Mw by 2030. That said, some challenges are likely to be faced along this growth path. Some measures, if undertaken by the government and the private sector, will help achieve this quantum growth.
Legislative and regulatory challenges: Private participation with foreign technical collaboration is being explored as a key option for promoting nuclear energy generation. At present, private participation is limited to the supply of equipment required for nuclear power generation and other supply chain activities for Nuclear Power Corporation of India (NPCIL). Light Water Reactor (LWR)-based projects implemented through joint ventures with NPCIL and other core public sector units as junior partners constitute another model being explored. Both these models would require legal and regulatory amendments.
Choice of appropriate technology and foreign collaboration: Technology-related decisions form a critical set of challenges. Nuclear energy provides a highly complex array of technologies for each element of its value chain and there are various models which the government can look at. France, for example, nearly 80 per cent of whose energy requirements are met by nuclear power, has a highly standardised design for its nuclear installations.
Privatisation of the Indian nuclear energy sector is likely to ignite competition between indigenously developed technologies and those proposed by private players. The choice of technology will impact the turnaround time required for commissioning these units, which is critical given the high capital investments required, the long-term operational safety and the ability of the regulatory agencies to monitor their ongoing operations. A key policy decision for the government will be with respect to the balance it wants to strike between the Indian private sector and involvement of foreign players who can gain a stronghold in the sector with their technological competence.
Securing nuclear fuel supply: Nuclear fuel is an important area where key policy interventions are required. Though India has rich thorium sources, present technology options do not allow its utilisation for commercial power generation. Though a certain degree of development is being undertaken in fast breeder technologies in India, it is unclear whether this technology will be pursued commercially. R&D in this sector has been focused primarily on achieving self-reliance. However, going forward, the commercial attractiveness of indigenous nuclear technologies is likely to gain prominence. Some of the technologies being explored are pressurised heavy water reactors, fast breeder reactors and light water reactors. Without clear guidance on the design aspects of India’s nuclear installations, the Indian private sector may face delays in proceeding with technology transfer agreements with potential foreign partners.
Developing manpower and skills: Considering the low capacities at present, India’s capabilities as well as indigenous technologies when applied to commercial nuclear production on a large scale are untested. We are also starting with a very limited manpower base. An important factor in nuclear accidents is operator mistakes. Along with reliable technology and designs, well-trained and experienced manpower is critical for ensuring operational safety in nuclear power generation.
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Pricing, costs, subsidies and ensuring economic viability: Economic viability will determine the success of nuclear energy projects. Financing up-front investment for nuclear plants is a challenge even in industrialised countries. The pricing and cost of nuclear energy are important aspects which the government would need to consider. Associated considerations would be whether or not the government should provide incentives for promoting growth in this sector. Various studies have shown that in deregulated markets, nuclear power is not cost-competitive in comparison to thermal power sources. Even fractional delays in commissioning and low plant load factors could create white elephants out of nuclear power installations.
Pricing of nuclear power, especially under the Availability Based Tariff (ABT) regime, will be a critical factor in ensuring its commercial viability. The Atomic Energy Act in its present form vests with the Central government the authority to fix rates and regulate supply from atomic power stations. While detailed project-wise costing would need to be done, it would be advisable for the government to avoid locking-in power prices of nuclear power stations and allow the market to determine nuclear power prices. This is essential to drive the focus of India’s nuclear establishment towards economically viable nuclear technology.
Nuclear waste and liability: While the impact of nuclear waste and associated costs has not yet been clearly quantified, the social costs of carbon emissions tilt the cost structure in favour of nuclear power. Opinion is divided on whether carbon credits should be allowed as an incentive to promote nuclear power, as the disposal of radioactive spent fuel exists as an intractable problem for the nuclear power industry. Apart from Finland, no other country is reported to have obtained public acceptance for nuclear waste disposal sites. With the Indian experience being limited to very small nuclear production capacities, this will pose a significant challenge to the atomic energy regulatory regime in India. The government will need to focus on quickly developing capabilities in this area.
Mechanisms for the procurement and transport of nuclear fuel and waste disposal will also need to be detailed. The Indian public also has valid concerns on nuclear safety that revolve around both nuclear fuel and waste. With a rapidly growing population, India is running out of isolated areas for locating nuclear power plants and sites for waste disposal. While there is an in-principle approval from the common man for nuclear energy, a lot of work remains to be done in terms of obtaining buy-in with communities which will live in and around nuclear power stations.
It is evident that the government has a long agenda to address and this entails numerous policy decisions. Nuclear energy seems to hold a certain promise for ensuring India’s energy security and its redemption will hinge significantly on the measures that India takes in the next few years.
The author is Partner, Infrastructure Advisory, Ernst & Young. The views are personal