Context: The Government of India, while presenting the Union Budget for FY 2024-25, inter alia, made announcements on the expansion of India’s nuclear energy sector, proposing partnerships with the private sector for research and developing Bharat Small Reactors (BSR), Bharat Small Modular Reactors (BSMR) as well as newer nuclear energy technologies.
India’s three Stage nuclear programme
1st Stage: Pressurised Heavy Water Reactor
- The first stage includes the setting up of Pressurised Heavy Water Reactors (PHWRs) and associated fuel cycle.
- PHWRs use natural uranium (U-238) as fuel and heavy water (deuterium oxide) as coolant and moderator.
- The Nuclear Power Corporation of India Limited (NPCIL) presently operates 22 commercial nuclear power reactors with an installed capacity of 6,780 MWe.
2nd Stage: Fast Breeder Reactors:
- The Fast Breeder Reactor (FBR) will initially use the Uranium-Plutonium Mixed Oxide (MOX) fuel.
- The Uranium-238 surrounding the fuel core will undergo nuclear transmutation to produce fuel (Plutonium, Pu-239), thus earning the name ‘Breeder’.
- Also, by transmutation, Thorium-232 will create fissile Uranium-233 which will be used as fuel in the third stage.
- In 2003, the Government had approved the creation of Bharatiya Nabhikiya Vidyut Nigam Ltd (BHAVINI) to construct and operate India’s most advanced nuclear reactor-Prototype Fast Breeder Reactor (PFBR). Once the FBR attains criticality, India will only be the second country after Russia to have a commercial operating Fast Breeder Reactor.
Benefits of FBR
- FBR is thus a stepping stone for the third stage of the program paving the way for the eventual full utilisation of India’s abundant thorium reserves.
- Electricity generated by FBR would be a source of green energy as the waste (Plutonium) from the first stage nuclear programme is reprocessed and used as fuel in FBR. Hence, it offers significant reduction in nuclear waste generated, thereby avoiding the need for large geological disposal facilities.
- In terms of safety, the PFBR is an advanced reactor with inherent passive safety features ensuring a prompt and safe shut down of the plant in the event of an emergency.
- Despite the advanced technology involved, both the capital cost and the per unit electricity cost is comparable to other nuclear and conventional power plants.
- Hence, the second stage of the Indian nuclear power program is imperative to meet the twin goals of energy security and sustainable development.
3rd Stage: Thorium-based Reactors
- The third stage will utilise India’s vast Thorium reserves. For it an Advanced Heavy Water Reactor (AHWR) is proposed that will use Uranium-233.
- By transmutation, Thorium will create fissile Uranium-233 which will be used as fuel in the third stage.
Key Points
- Aims to achieve 500 Gigawatts of non-fossil fuel energy by 2030, as pledged at COP26, Glasgow 2021.
- Investment and Capacity Goals:
- India’s country profile, as published by the World Nuclear Association in September 2024 recognises an in-principle proposed gross increment of 32 GWe in the Indian nuclear energy production capacity.
- The ambitious expansion requires significant capital investment and skilled resources.
- Legislative hurdles for private participation
- The Atomic energy act 1962, the primary governing statute at the helm of the development and the operation of the nuclear energy sector.
- Pertinently, Section 3(a) of the AEA, 1962 empowers only the central government “to produce, develop, use and dispose of atomic energy”.
- The AEA gives the government sole control and responsibility over all activities in respect of nuclear energy either through an authority or company established by it.
- In essence, the Department of Atomic Energy (DAE) and the Nuclear Power Corporation of India Limited (NPCIL) currently have overarching control over the nuclear energy infrastructure.
- Supreme Court Ruling (September 2024): Sandeep T.S. vs Union of India & others.
- Dismissed a petition challenging AEA’s restrictions on private participation, emphasizing strict regulatory safeguards due to potential misuse and accidents.
- Regulatory Uncertainty:
- Ongoing legal challenges to the Civil Liability for Nuclear Damage Act, 2010 (CLNDA), create uncertainty for private investments.
- CLNDA aims to ensure no-fault liability of operators for nuclear accidents, but its constitutionality is under scrutiny.
The Civil Liability for Nuclear Damage Act, 2010 (CLNDA) is a significant piece of legislation in India that addresses liability and compensation for nuclear damage.
Objective: The Act aims to provide a framework for compensating victims of nuclear damage arising from a nuclear incident. It establishes a no-fault liability regime, meaning the operator of a nuclear facility is liable for damages regardless of fault.
Liability: The operator of the nuclear installation is primarily liable for nuclear damage. The Act caps the maximum liability of the operator at ₹1,500 crore (approximately $180 million). If the damage exceeds this amount, the Central Government will cover additional costs up to 300 million Special Drawing Rights (SDRs).
Claims Commissioner: The Act provides for the appointment of a Claims Commissioner to adjudicate claims for compensation. It also establishes a Nuclear Damage Claims Commission to handle larger claims and ensure prompt compensation.
Right of Recourse: The operator has the right to recourse under certain conditions, such as if the nuclear incident results from an act of terrorism or if the damage is caused by a supplier’s defective equipment.
Insurance: Operators are required to maintain insurance or other financial security to cover their liability for nuclear damage.
Exclusion of Jurisdiction: Civil courts are excluded from entertaining any suit or proceeding related to claims for nuclear damage, ensuring that all claims are handled by the designated authorities.
This Act was crucial for operationalizing the 2008 Indo-U.S. civilian nuclear agreement, as it provided the necessary legal framework for foreign companies to participate in India’s nuclear energy
Financial Risks: Nuclear projects require substantial upfront investment and have long gestation periods. The high costs and financial risks deter private investors, especially given the uncertainties around project completion and return on investment.
Public Perception and Acceptance: Public opposition to nuclear power due to safety concerns and environmental impact can affect the willingness of private companies to invest. Building public trust is crucial but challenging.
Technological Challenges: Developing and maintaining nuclear technology requires specialized knowledge and infrastructure. The private sector may lack the necessary expertise and resources to manage these complex technologies.
Waste Management: Handling and disposing of nuclear waste is a critical issue. The long-term storage and management of radioactive waste pose significant challenges and require stringent regulatory compliance.
Market Competition: Nuclear power competes with other forms of energy, such as renewables, which are often cheaper and face fewer regulatory hurdles. This makes it harder for nuclear power to attract private investment
- Current status of Private Sector Involvement:
- Historically limited to engineering, procurement, and construction (EPC) roles, with companies like Megha Engineering & Infrastructures participating.
- Measures to increase private investment
- NITI Aayog Report:
- Discusses promoting private sector involvement in Small Modular Reactors (SMRs) and emphasizes the need for:
- A supportive regulatory framework.
- A clear civil nuclear liability framework.
- Discusses promoting private sector involvement in Small Modular Reactors (SMRs) and emphasizes the need for:
- Public-Private Partnerships (PPP):
- Proposed structure where government retains 51% ownership of nuclear plants, allowing private investment while ensuring government accountability.
- Entities with majority government ownership would be subject to transparency requirements under the Right to Information Act.
- Liability Concerns:
- High liability standards are necessary due to the risks associated with nuclear technology, as evidenced by past disasters like Chernobyl and Fukushima.
- Compensation for nuclear incidents is governed by the CLNDA, but its constitutionality is being challenged, raising concerns over the adequacy of liability protections.
- Legislative Needs:
- Comprehensive legislation is essential to address the sensitive nature of nuclear technology and foster a conducive business environment.
- Ongoing litigation and legislative restrictions hinder private sector involvement, necessitating urgent reforms.
- Legislative and policy adjustments will be crucial for achieving India's energy generation goals through renewable sources.
- The path for private participation in India’s nuclear energy sector requires careful navigation of existing laws and challenges, with significant implications for investment and regulatory frameworks.