Nuclear Cog in Indian Energy Transformation Wheel
Speaking in the webinar on August 27, 2021, on the Role of Nuclear Power in Addressing Climate Change organized by the Payne Institute of Public Policy, a think-tank of Colorado School of Mines, Professor Rachel Slaybaugh of University of California at Berkley emphasized that the nuclear energy can play a major role in decarbonizing energy and technological innovations are likely to make nuclear electricity competitive. The discussions that followed focussed on issues of cost of generation, regulatory requirements, project implementation, and safety. More than a decade ago, in India, in 2007-08, the then union government had bet on nuclear energy to pivot the large scale expansion of electricity generation. The Indo-US Nuclear Cooperation Agreement was signed in October, 2008. That was followed by India manoeuvring the geopolitics of nuclear fuel supply and managing to obtain exceptions made for India to source fuel and technology. Indian energy sector sensed new opportunity and foreign and Indian private sector partnerships and alliances were beginning to take shape. And, then, Fukushima happened in 2011.
Debate about safety of the nuclear technology took the centre-stage. In view of the recency of Fukushima, the Indian lawmakers demanded civil liability laws to expand and include catastrophe risks, and thereby, the deterring the foreign technology vendors. The capital costs of projects assuming these risks turned out to be prohibitive for Indian consumers. Thus, in some sense, India came back to square one. Indian nuclear power programme had been mostly indigenous. The current administration underscores the need for technological and fuel self-reliance, which then is likely to retain largely indigenous character of the nuclear energy sector in India.
Various energy supply scenarios being discussed by Indian stakeholders have now been conservative in their forecast for capacity addition in nuclear power. In 2020-21, nuclear power accounted for about 3.11% of total electricity generated and according to International Energy Agency’s forecast based on stated policy scenario for 2040, the proportion could rise to 5.7%. This while in percentage terms may not appear significant but in terms of generation capacity addition terms even this appears too optimistic considering the projects under construction.
Social issues have been one of the?critical reasons for delays in project implementation. The iconic protests at Kudankulam-II plant by the local residents and fishermen communities caused the project that started in 2002 getting commissioned in 2017. These protests were spurred by the Fukushima disaster and the narrative of safety of the technology developed in cooperation with Russia did not find easy acceptance. Such challenges are accentuated due to lack of truly independent regulator. Nuclear energy sector, although having different legal entities, is a monolith, government-owned companies explore, mine, process and transport fuel, develop power projects, and dispose waste, and thus control the entire supply chain. And yet another government agency plays the role of regulator. Dispensability of consultative processes for environmental clearance, social impact assessment and land acquisition for projects of national significance only adds to risks of project delays. Economics of benefits of thorough due diligence and stakeholder engagement in contrast with costs of project delays are not fully comprehended.??
Affordability of nuclear electricity hinges on low cost fuel supplies and project implementation on time and budget. Older plants that have financial depreciated and which source uranium at nearly cost of mining from government-owned mining entity have been able to keep the tariffs lower for such plants. On capital costs, however, there are some issues in return of capital per unit of electricity generated. Usually, the nuclear power plants have extended life, even of 60-100 years, and thus value based life cycle capital costs can be lower or comparable to renewable power and quite favourable to coal based or natural gas power. These can potentially create value proposition for investment in nuclear capacity even in light of manageable delays.
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Import dependence for fuels may have implications on costs, but the possibility of storage of fuel for lifetime supplies when prices are low can be a good proposition. Value adjusted levelized cost of electricity therefore may still support a case for nuclear energy.
Most important consideration of all is not the comparative economics of electricity generation from nuclear versus renewable sources, but it is the environmental benefits that it offers in comparison to fossil fuel based electricity. Offering the same secure base-load electricity supply and scalability, nuclear energy with no greenhouse gas emissions is a better choice than continued dependence on fossil fuel based power. The Energy Policy Institute of University of Chicago in its recent study indicated that air pollution can lower life expectancy in India by about 8.5 years, and coal based power plants are one of the key contributors to the air pollution. Environmental costs of new coal power plants and associated coal mines are also high in terms of large scale deforestation, untapped coalmine methane, energy-intensive haulage and transportation of coal, and carbon dioxide emissions from combustion. While nuclear power has its own set of challenges in nuclear waste disposal, its environmental performance should tilt the balance away from coal towards itself.
If India has to move on a path, however elongated, to net zero, the trade offs are not between renewable sources and nuclear energy, on the contrary, they need to complement each other. The key question is why nuclear power still appears to be just a cog in the wheel when coal based power, which occupies close to 60% of the electricity market share, needs to vacate that space. Nuclear energy needs to play more than just a peripheral role in Indian energy sector transformation.