Nuclear power industry opens doors to private companies, with caveats

Experts say stringent terms could make industry apprehensive

After years of lull, the nuclear power industry will open its door to private investment but with caveats. State-owned Nuclear Power Corporation of India Ltd (NPCIL) on Tuesday issued a public notice inviting interests from the private sector to set up “Bharat Small Reactors (BSRs)”, which are small-size nuclear reactors with a capacity of up to 220 megawatt (Mw). 

However, the stringent terms laid down in the “request for proposal” (RfP), by NPCIL, would make the industry more apprehensive than excited, according to experts. 

In the Union Budget 2024-25, Finance Minister Nirmala Sitharaman announced BSRs would be set up with private capex. The move is in line with India’s efforts to increase the share of non-fossil fuel in its energy basket. The current nuclear power generation capacity —of 7.4 gigawatt (Gw)—has been built by government-owned entities. 

The RfP is looking for private players that would utilise electricity generated from the plant concerned for captive/self-use. It will also allow them to sell the electricity to a third party or the open market as well. 

Under the proposed business model in the RfP, the entire funding has to be made by the company selected for the project.

The RfP also states while the project will be constructed by the private entity it will be under the supervision and control of the NPCIL, “and on completion, the asset would be transferred to NPCIL for operation”. Sector experts pointed while private investment was long overdue, caveats such as these might be a deterrent. 

A power-sector executive said the RfP also stated the private entity would select agencies for constructing the power plant only from the approved list of vendors provided by NPCIL. 

After the Budget announcements, several private companies had evinced an interest in the sector. 

Tata Power in September said it had signed a memorandum of understanding with the Government of Rajasthan to invest Rs 1.2 trillion over 10 years and this included a nuclear power plant, along with a 10 gigawatt (Gw) of renewable energy capacity, 2 Gw of solar module manufacturing, and investment in transmission and distribution. 

In July, during a Tata Power annual general meeting, N Chandrasekaran said: “(In nuclear power), the only area we will be open to is what is called the small modular reactors when the opportunities come and the government allows the company to look at entering that field.”  

In an analyst call in July senior executives of Larsen & Toubro in a statement noted: “We do have a full-scale capability in this segment, having worked very closely with NPCIL across most of their nuclear power plant installations in the country. I think it’s a question of joint effort and we will be able to meet up to those requirements. Our Heavy Engineering division, which is forming part of our Projects & Manufacturing division, is already pre-qualified for the smaller and modular reactors to supply them.” A senior sector executive said: “The RfP is a welcome move. We have to wait and see the reaction of the private sector. 

POWER PLAY

 

*  Bharat Small Reactor: 220 Mw pressurised heavy water reactors which has enhanced safety and efficiency features

 

*  NPCIL to supply fuel and heavy water for the project

 

*  Private players to construct the project and transfer it to NPCIL for operations

 

*  Project constructor to choose vendors from NPCIL’s approved list

 

*  Land to be identified by private entity, get state-level approvals as well

 

*  Company can use electricity for captive use, sale; proceeds to go to the company