Image Source: Getty
India's nuclear power industry is about to undergo a radical change as the Nuclear Power Corporation of India Limited (NPCIL) made a bold and historic move by issuing a Request for Proposal (RFP) to invite private players into the development of small reactors and to get a skin in the upcoming nuclear projects, marking a watershed moment in India's approach to the nuclear sector. NPCIL can assist these industry pioneers by sharing expertise and technology with regulatory permissions. This collaboration will help increase efficiency, cost reduction, and innovation in the design, construction, and management of nuclear facilities. In return, the industries will benefit from the net electricity output for their captive use or resale, subject to the Department of Atomic Energy’s (DAE) tariff regulations. This is a momentous step for the industry because of the dual implications of the use cases. The atomic energy portfolio has always been given special attention at the South Block and other national political corridors and has always been protected from private participants. This unprecedented move strengthens India's commitment to clean and sustainable power generation and is a major step in increasing private sector involvement in nuclear energy.
The industries will benefit from the net electricity output for their captive use or resale, subject to the Department of Atomic Energy’s (DAE) tariff regulations.
Private players in the market
The private entities have always been forestalled from entering the nuclear sector, primarily due to stringent regulatory frameworks established under the Atomic Energy Act of 1962, which grants exclusive control over nuclear energy activities to the central government. In India, it is executed through federal entities like the DAE and NPCIL. This centralisation effectively prohibits private companies from engaging in core activities related to nuclear power generation and restricts private companies from producing or utilising atomic energy—(AEA Section 22). However, changes have occurred in recent years, including the National Thermal Power Corporation (NTPC) entering the nuclear sector through a joint venture with NPCIL to build a large-scale plant at Mahi Banswara. This was the first time an entity other than NPCIL entered the nuclear portfolio and can be seen as the first step towards the privatisation in the sector.
Bridging public and private: Pushing for Bharat Small Reactors.
India’s commitment to safety and sustainability is highlighted by the development of Bharat Small Reactors (BSR)—indigenous Small Modular Reactors (SMR). The government recognised the need to address the SMR market to attract private investments and boost atomic energy production and announced BSRs, which are compact, scalable, and quicker to deploy. Based on Indigenous Pressurised Heavy Water Reactors (PHWR) technology, BSRs can play a key role in economic and infrastructural projects like special economic zones, smart cities, and industries with heavy energy requirements, but the financial commitment to revamping nuclear infrastructure to include BSRs is immense, often beyond the capacity of governments alone. Encouraging private investment through request for proposal (RFP) not only alleviates this burden but also brings in the taste of diverse capitalistic flavours of making returns and addresses three critical pillars of India’s energy strategy: sustainability, energy security, and industrial competitiveness.
The government recognised the need to address the SMR market to attract private investments and boost atomic energy production and announced BSRs, which are compact, scalable, and quicker to deploy.
The RFP highlights a four-step project approach, beginning with pre-project evaluation, which includes site studies and clearances of the minimum land area of 331 hectares for twin units (2 x 220 MWe), which would then be sub-leased to NPCIL for a long-term lease (99 years or more), followed by the construction phase under NPCIL supervision, after the plant is ready, all project assets, including the land, are transferred to NPCIL for possession, control, and operation at a nominal value of INR 1. In the operation phase, the plant is managed by NPCIL, with costs borne by the user, and finally decommissioning, which is also funded by the user in accordance with the Atomic Energy Act. During the whole process, the user has to strictly adhere to the Atomic Energy Regulatory Board (AERB) guidelines for siting, construction, operation, and decommissioning.
Financial imperatives
The RFP clearly defines the areas of the user's financial obligations, where the entire Capital Expenditure and Operating expenditure, including maintenance and decommissioning costs will be taken care of by the user, moreover, it mentions that the users are required to pay annual fees for the plant’s operation and maintenance, including compensation for NPCIL’s expertise and services, which begins at an initial rate of INR0.60 per kWh of electricity generated and then will escalate by INR 0.01 per kWh every year. This fee compensates NPCIL for providing technical oversight, regulatory compliance, and operational expertise.
Although the clear figures of financial investments required by the institution to collaborate with NPCIL can’t be directly drawn from RFP, a rough estimation from the factors such as financial qualifications and proof of net worth not less than INR 3,000 crores as of FY 2023-24, and required high creditworthiness highlights that the project isn’t going to be inexpensive.
International dimensions: US-India nuclear relations
In a positive turn of events, the US has strengthened its strategic partnership with India by announcing the removal of restrictions on Indian nuclear entities. This was first made public during former National Security Advisor Jake Sullivan's visit to New Delhi, where he confirmed this policy shift, stating that the US aims to eliminate barriers that have historically hindered civil nuclear cooperation.
The recent move addresses these persistent restrictions, fostering deeper collaboration and marking a benchmark in India-US Nuclear Cooperation after 2019, where both nations agreed to build six US-designed nuclear power plants in India.
This decision symbolises the culmination of years of gradual development since the 2008 US-India civil nuclear agreement. While many sanctions imposed after India’s 1998 nuclear tests were lifted over the years, several entities under India’s Department of Atomic Energy, like Indian entities Indian Rare Earths, Indira Gandhi Atomic Research Centre (IGCAR), and Bhabha Atomic Research Centre (BARC) remained in the US Department of Commerce’s restricted list. The recent move addresses these persistent restrictions, fostering deeper collaboration and marking a benchmark in India-US Nuclear Cooperation after 2019, where both nations agreed to build six US-designed nuclear power plants in India. However, due to liability concerns and restrictions on Indian entities, the progress has been slow. With these obstacles removed, we can expect to hear rapid advancement on the project.
Conclusion
The public-private partnership in the Indian nuclear sector is set to catalyse the industry with the NPCIL collaboration, which can significantly benefit various sectors with high energy demands by providing a reliable, clean, and cost-stable source of energy, ensuring long-term sustainability goals and leveraging the technology for economic and environmental benefits. Moreover, the entry of private players into India’s nuclear energy market, coupled with the recent US decision to lift restrictions, marks a pivotal moment in the country’s energy dynamics, accentuating India's bold steps to address its energy challenges. With the right mix of policy support, international collaboration, and private sector ingenuity, India’s nuclear energy ambitions are set to soar to unprecedented heights.
Kavya Wadhwa is a nuclear energy advocate and policy analyst dedicated to promoting sustainable energy solutions and driving policy reforms.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
PREV
