Alternate Energy in India:
Nuclear Power

chillibreeze writer — Indira Misra

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India’s signing of a civilian technology supply agreement in 2008 with the US brought an end to the nuclear exclusion which India had been subjected to for more than three decades since 1974. This also marked the opening up of the hitherto restricted nuclear energy sector for private investment. Since the deal has come through, 45 member countries of the Nuclear Supplies Group (NSG) have been vying with each other to get a pie of the expanding civilian nuclear energy market.

The Indian nuclear power market is expected to reach $40 billion by 2020. The government estimates indicate that the country will get nearly 25% of its energy requirements from nuclear power by 2020, while the proportion is expected to go up to 50% by the middle of this century. By 2050, the country is expected to produce nearly 600–700 gigawatts. Nuclear power supplied only 2.5% of India’s electricity in 2007.

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These figures reflect the huge potential that this sector has. As a result, atomic companies from nuclear power nations such as France, Russia and the US are planning to get a share in the construction of six to eight reactors. Furthermore, British companies operating in the nuclear safety and research space have initiated talks with the Indian majors. According to the Indian government’s release, it is holding negotiations with France, Russia and USA for setting up of nuclear parks in various parts of the country and each park is expected to locate six to eight reactors, which can produce around 1,000 to 1,650 Mega Watt of power.

The huge investment program is indicative of the potential for Indian suppliers in the value chain. Besides international players, the Indian players have also chalked out strategies to be a part of the expanding business opportunities both in the domestic and exports market.

Bharat Heavy Electricals Ltd. (BHEL), one of India’s important players in power- equipment manufacturing is entering into international partnerships to make conventional equipment for atomic plants. Similarly Bharat Forge has tied up with a French company Areva, to set up a nuclear forgings facility. L&T has also entered into a partnership with Westinghouse and AECL of Canada for reactor manufacture. Moreover, engineering majors Larsen & Toubro (L&T) along with BHEL are also expected to play a significant role in the forgings space.

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According to a report published by the International Atomic Energy Agency (IAEA), the changes taking place in the global nuclear energy space has shifted the focus on Asian nations. In the future, this sector is expected to be dominated by Asian nations such as China, India and South Korea as these countries gear up to meet their energy needs from nuclear power.

Internationally, there is a capacity constraint on production of key components such as pressure vessels and key forgings and there is a worldwide shortage of contractors with nuclear certification, nuclear component manufacturers and nuclear skilled workers. Besides the Russian nuclear industry, only two major companies — Japan Steel Works and French firm Creusot Forge — are currently equipped to make critical reactor parts such as pressure vessels. Indian firms are eyeing the huge opportunity which awaits them the critical equipment segment of nuclear power.

Nevertheless, the sector remains dominated by the public sector as the Atomic Energy Act requires nuclear power generation to be done by a government company in which at least 51% shares are held by the central government. However, the private sector can play a significant role in the manufacturing and construction of nuclear equipments. To achieve the above target of 25% contribution from nuclear power, the sector needs to increase its capacity by nearly 100 times.

Since the current power situation in India is doomed because of shortage of fossil fuels, nuclear power programs have assumed utmost significance. India has 17 operating nuclear power reactors and in the short term, it plans to increase its current capacity of 4,120 megawatts to 10,000 megawatts by 2012.
As nuclear power turns into the major source of power in India, India will join the league of nations like France, Canada and Sweden. Besides providing the much needed energy security, it is one of the significant steps for ensuring a greener climate. However, the legislative changes required to attain its full potential have yet to be realized.

The Economic Survey for 2008-09 had called for allowing private players - both domestic and foreign - to invest in the country’s nuclear power sector. Although it called for a foreign direct investment (FDI) cap at 49%, it seems that the foreign players will have to wait for some more time before going solo. There is a need to enact the civil nuclear liability legislation and amend the Atomic Energy Act for the sector to realize its full potential.

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