Nuclear Energy

5th August – Nuclear Energy

Whither nuclear energy?

It has been exactly 15 years since the announcement of the historic US-India Civilian Nuclear Agreement. This high-profile deal signed in 2005 by then Prime Minister Manmohan Singh and US President George Bush dominated Indian politics through the second half of the previous decade. But it has failed to provide rich dividends on India’s nuclear energy ambitions.

Poor performance –

  • As of March 2008, the same year that the agreement was finally signed by both sides, the share of nuclear power in total installed electricity generation capacity was 2.9 per cent. Twelve years later, that share has actually fallen to 2.5 per cent.
  • In terms of actual electricity generated, the scenario is only slightly better, with the share of nuclear in total electricity generated, rising by about a percentage point in the last 10 years. Ironically, over this same period, the share of thermal energy in total electricity generation has increased by 3 percentage points.

Recent positive developments –

  • As of March this year, Parliament was told that there were five nuclear power projects under construction, with a combined capacity of 7,200 MW. Another six projects, of a total 9,000 MW, had been approved and financially sanctioned.
  • Last year, the US agreed to build six nuclear reactors in India in Andhra Pradesh. And in a small step, the government also allowed private sector participation in nuclear medicine and nuclear use in agriculture (irradiation for the preservation of food).
  • India has also just signed a civil nuclear cooperation agreement with the European Union. However, it is clear that the reality has not lived up to the expectation.

What went wrong with Indo-US Civil Nuclear deal?

  • Firstly, after much hype, following the nuclear deal, India passed a nuclear liability law which made manufacturers of nuclear equipment, rather than operators of a plant, liable in case of a nuclear accident. This caused many manufacturers to cool off on the Indian market. The problems with nuclear capacity addition are long lasting — it has been affected by a chronic underperformance, right since inception.
  • The governance structure of the sector has to bear a substantial part of the blame. The perverse consequences of its strategic importance have meant that the main institutions — the Atomic Energy Commission and the Department of Atomic Energy (DAE) — have tended to face relatively less oversight and have reported directly to the Prime Minister, leaving them less accountable than otherwise. Similarly, the Atomic Energy Regulatory Board, reports directly to the DAE — thus compromising regulatory independence. A nuclear deal will not solve these problems, which are entirely of our own making.
  • Quite apart from this has been the fact that the global mood has turned distinctly against nuclear energy since the beginning of this decade, following the Fukushima disaster. In India, too, vociferous protests from local populations have dogged projects such as the Kudankulam plant in Tamil Nadu.
  • But the real dampener has probably been simple economics. In fact, the real action, so to speak, has been in the renewable energy sector, whose share of total installed capacity has risen dramatically in the last decade by a little over three times, at the same time as its tariff costs have collapsed. In contrast to nuclear power, India has usually exceeded its targets, at far lesser investment, in the area of renewable energy. In India today, renewable energy is highly competitive, even when compared with thermal energy.
  • In contrast, the capital costs of nuclear plants are high and remain so. Nuclear power tariffs are set by the DAE, but have to compete in the market with tariffs from other sources which are more market-driven and highly competitive. Put simply, nuclear power has simply not kept pace with reforms in the rest of the power sector in the country.

Conclusion –

What is clear is that unless reforms to the regulatory and institutional structure of nuclear power in India are not carried out, the promise of the nuclear deal will not be met. Given that these institutional structures have persevered for decades, any government looking to carry out such reforms will have its work cut out.

SourceBusiness Standard

QUESTION – Despite high political and economic costs, the Indo-US nuclear deal has failed to deliver the intended results. Comment.

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