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After n-logjam clears, industry awaits fine print on cost, viability

The comparative cost of setting up a supercritical-technology based thermal power project is around Rs 6 crore per mega watt.

THE legislative hurdle holding up progress in the Indian nuclear sector may have been partly addressed, but the bigger challenge could lie at the next step — ensuring the economic viability of projects based on imported reactors such as the ones being offered by US vendors like GE-Hitachi and Toshiba-Westinghouse Electric, and France’s Areva.

As against the established benchmark of project cost of up to Rs 7 crore per MWe (mega watt electrical) for existing nuclear projects based largely on the indigenous PHWR (pressurised heavy water reactor) technology, the capital cost of projects being executed around the world based on imported Light Water Reactor (LWR) technology — including Westinghouse’s four AP1000 reactors being deployed in China and Areva’s EPR being set up in France and Finland — ranges between Rs 12 crore and 25 crore per MWe.

Higher capital costs translate into a spike in generation tariff. Executives from two of these global reactor companies conceded that despite the “deal” announced by India and the US on Sunday, there are uncertainties over the insurance costs, and clarity on costing of projects would be contingent to India ratifying a global pact that widens access of participants in the country’s civil nuclear sector to six global insurance pools.

The two American companies were guarded in their response to Sunday’s “deal” even as they indicated that it was still a work-in-progress. To a question on the viability issue, Christopher White, a spokesperson for GE-Hitachi, said, “We believe a sustainable solution is one that brings India into compliance with the International Convention on Supplementary Compensation.” He did not respond to specific queries, saying that the company was constrained to limit its comments “until we have an opportunity to review the agreement in detail”.

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Hans Korteweg, Communications and Government Affairs Manager for Westinghouse Electric, said the company “looks forward to additional meetings and discussions, including the planned insurance seminar leading to full implementation of the US-India Civil Nuclear Agreement”.

In terms of the “overnight capital cost” — an industry term for the EPC (engineering procurement construction) cost plus owners’ cost for nuclear projects — the OECD Nuclear Energy Agency’s calculation of cost for a nuclear power plant built in the OECD rose from about $1,900/kWe (about Rs 3.8 crore per MWe) at the end of the 1990s to $3,850/kWe (or about Rs 18 crore per MWe) in 2009.

China, where Toshiba-Westinghouse Electric AP1000 design reactors are being set up, has estimated construction  cost for the first lot of four reactors at around $2000/kWe (or about Rs 12.2 crore per MWe), which works out to about one-third of similar AP1000-based projects being set up in the US currently. Considering that the Chinese projects are already running three years behind schedule, sectoral players indicate an escalation in the final project cost.

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The French national audit body, the Cour des comptes, had estimated in 2012 that the overnight capital cost of building nuclear power plants would be Euro3,700/kWe (about Rs 25.5 crore per MWe) for the Flamanville project in France being built using Areva’s EPR. The project has also been delayed by at least four years. Twin units of the same 1,650 MWe reactors are to be deployed at Jaitapur in Maharashtra.

GE-Hitachi’s ESBWR (Economic Simplified Boiling Water Reactor) design, based on which the Kovvada project in Andhra Pradesh has been planned, was certified by the US Nuclear Regulatory Commission (NRC) just in September last year for use in the US and costing estimates are still unclear.

Already, the first set of twin reactors that are part of the 12 reactor units that Russia has undertaken to supply to India will be the most expensive nuclear power units to be set up in the country so far. The two new Russian-design VVER-1000 reactor units (Kudankulam power project 3 & 4) to be set up in Tamil Nadu, which would come up at the Kudankulam site where two identical units (KKNPP 1 & 2) are nearing commissioning, entail a sanctioned project cost of Rs 39,849 crore. This would translate into a cost of nearly Rs 20 crore per MWe as against the established benchmark of project cost of Rs 7-10 crore per MWe for existing nuclear projects based largely on the indigenous PHWR technology. The comparative cost of setting up a supercritical-technology based thermal power project is around Rs 6 crore per mega watt.

First published on: 27-01-2015 at 01:37:38 am
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