Paris climate agreement: N-power push to meet green commitment

Increasing the share of clean energy in the total power generation bank lies at the core of achieving a low carbon economy and the govt is working on an actionable plan.

Written by Anil Sasi | New Delhi | Published:October 5, 2016 1:55 am
(Illustration: C R Sasikumar) (Illustration: C R Sasikumar)

India’s strategy to pursue a low-carbon growth model in the coming decades, formally enunciated in the Intended Nationally Determined Contribution announced at COP-21 in Paris late last year and ratified by the government on October 2, is now being translated into an actionable working plan. Alongside a concerted push for solar and wind energy capacities, a detailed plan to augment the investment in the nuclear power generation sector spanning the next 15 years is being prepared by the Department of Atomic Energy.

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A senior official privy to the planning process indicated that alongside the addition of second 1000 MWe (mega watt electric) Kudankulam nuclear power unit to India’s national grid in August this year, which increased the country’s installed nuclear power capacity to 6,780MWe, nine more reactors that are at various stages of implementation are expected to add an additional 6,700 MWe capacity over the next seven years. According to the plan, before March 2017, commencement of work is planned on 16 new reactors with a total capacity of 16,100 MWe (mega watt electric), including eight indigenous PHWRs of 700 MWe each with a total capacity of 5,600 MWe and eight LWRs based on international cooperation — with Russia, France and the US — totaling to a capacity of 10,500 MWe. Finalisation of these projects, a senior official indicated, is being pursued with “due attention to cost, technology adaptation and safety”.

For stepping up the nuclear capacity, there are two key enablers. Once, by the end of this calendar year, nearly 3,000 metric tonnes (MT) of nuclear fuel is likely to be shipped into India from three countries — the Russian Federation, Canada and the Republic of Kazakhstan. The uranium shipments expected in 2016 is likely to be a record for a single year and would, in quantitative terms, amount to nearly 53 per cent of total nuclear fuel imported into India since the country’s access to the global nuclear fuel market opened up in 2008.

Second, the Indian Nuclear Insurance Pool, launched by the state-owned General Insurance Corporation-Reinsurer (GIC-Re) and other Indian insurance companies in June last year to offer an insurance product for NPCIL for covering the operator’s liability under the provisions of the Civil Liability for Nuclear Damage (CLND) Act 2010, will subsequently launch a separate product to specifically cover the risks of the suppliers under this Act.


Alongside these two steps, the decks have been cleared for state-owned Nuclear Power Corporation of India Ltd (NPCIL) to launch nuclear ventures in collaboration with three other public sector firms, with the NDA government planning to designate upcoming atomic power projects with foreign technical cooperation to be set up through these joint ventures. Official sources indicated that this is likely to be the pattern followed for all new projects that are slated to be set with foreign technical cooperation, beyond the two Kudankulam units in Tamil Nadu that already being set up with Russian assistance. Discussions in this regard with the prospective JV partners — cash-rich state-owned energy utilities NTPC Ltd, Indian Oil Corporation and Nalco — have been initiated, officials involved in the exercise said.

The decision to leverage the proposed JVs for new projects being set up under the foreign collaboration route marks a departure from the current strategy followed by the country’s nuclear establishment, where atomic power reactors are executed solely by NPCIL and are funded by a mix of debt and equity leveraged by the nuclear power utility. Sources indicated that the broader view within the nuclear establishment earlier was to deploy all the three JVs for new projects being set up based on the indigenous Pressurised Heavy Water Reactor, or PHWR, technology. The plan to deploy the JVs for new imported light water reactor, or LWR-based projects to be set with foreign technical cooperation, could thereby, mark a change in strategies and potentially result in the pooling of additional equity worth nearly Rs 30,000 crore for expanding the country’s installed nuclear power capacity.

Earlier, in January this year, the Atomic Energy (Amendment) Act was one of the five legislations that got the President’s approval, thereby ensuring the legal framework for NPCIL to launch collaborations with the three other public sector utilities. The move to leverage the JVs comes amid festering concerns over India’s nuclear liability provisions holding up the deployment of imported light water reactor-based projects in collaboration with global vendors. The proposal by NPCIL to strike joint ventures with cash-rich PSUs is being seen as an alternative strategy to tide over the paucity of funds and ramp up execution capability for new projects using the indigenous pressurised heavy water reactor technology.

At present, only two PSUs — NPCIL and Bharatiya Nabhikiya Vidyut Nigam Limited (BHAVINI), which are under the control of the Department of Atomic Energy, can operate nuclear power plants in the country. The Atomic Energy Act, 1962, prescribed that a company in which not less than 51 per cent of the paid-up share capital is held by the Central government can operate nuclear stations. However, the licensing of joint ventures was a grey area. The new law amends the Atomic Energy Act, 1962, to change the definition of a “government company” as described in the Act with a view to widen its scope. The JV firms with these three public sector energy majors — Anushakti Vidyut Nigam Ltd (NPCIL and NTPC), NPCIL-Indian Oil Nuclear Energy Corporation Ltd and NPCIL — NALCO Power Company Ltd have already been incorporated.

Currently, nuclear power reactors are being funded by a mix of debt and equity and are executed by NPCIL, with the equity requirements being met from internal resources of the NPCIL, a PSU under the DAE, and domestic budgetary support, officials involved in the exercise said. NPCIL currently operates 22 reactors with a generation capacity of 6,780 MWe.



Meanwhile, the move to have a separate product for suppliers comes at a time when the state-owned project developer NPCIL is facing an equipment sourcing crunch for two of its under-construction indigenous reactor technology-based projects in Gujarat and Rajasthan, with even domestic equipment vendors dragging their feet on supply of components for nuclear power plants. Representatives of equipment vendors have repeatedly made pointed references to the looming uncertainties over the Civil Liability Nuclear Damage Act (2010), with the liability issue being flagged as a concern by equipment firms who have said that even companies that do not supply directly to NPCIL but are sub-suppliers (supplying components to an NPCIL vendor) are increasingly unwilling to supply equipment as NPCIL is refusing to give them indemnity from the liability provisions of the Act. The nuclear liability law was enacted with the intention of tying-down foreign suppliers to a liability regime, but is being perceived as creating unlimited liability, both in terms of time and costs, for vendors.

The contentious clauses in the law include 17 (b), which says the operator (NPCIL) has the right to recourse against suppliers in case of a nuclear accident, and clause 46, which says the suppliers can be sued under any other Indian law as well as by citizens at large.