India’s Push for Private Investment in Nuclear Sector
Nuclear Sector – The Nuclear Power Corporation of India Ltd (NPCIL), a government enterprise under the Ministry of Atomic Energy, has issued a call for proposals from private companies to establish Bharat Small Reactors (BSRs). This marks the first official step by the Indian government to decentralize the country’s nuclear power sector.
NPCIL is seeking proposals from forward-thinking Indian industries to install 220 MW Bharat Small Reactors (BSR) for internal use. These BSRs are 220 MW Pressurised Heavy Water Reactors (PHWR) known for their outstanding safety and performance track record. They are compact and designed for internal use, as stated by the PSU.
Nuclear power, while not renewable, is a clean energy source with zero emissions. It operates by splitting uranium atoms through fission to generate energy. The heat produced by fission is utilized to create steam that powers a turbine, generating electricity without the harmful by-products associated with fossil fuels. The PHWR technology employs natural uranium, heavy water coolant, and a horizontal cylindrical vessel called a calandria to produce nuclear energy.
India is pursuing nuclear energy as a power source because it cannot solely rely on renewable energy sources like solar, wind, and hydro to reduce its emission intensity. Even if it meets its Nationally Determined Contribution (NDC) target through renewable energy alone, the cost of power would be prohibitively high. NPCIL has announced that BSRs will be established with private funding, adhering to existing legal frameworks and approved business models.
The 2024 Union Budget introduced plans to collaborate with the private sector to construct Bharat Small Reactors (BSR) and research and develop Bharat Small Modular Reactors (BSMR). The Department of Atomic Energy has been allocated Rs 24,969 crore in this year’s budget for this purpose.
India’s nuclear sector is regulated. It is governed by the Atomic Energy Act, 1962, under which only government-owned entities such as NPCIL can generate and supply nuclear energy. There has been no private sector involvement in India’s nuclear power sector so far.
Stringent conditions
According to the terms set by the NPCIL, the private stakeholder is responsible for finding the land and covering all capital and operational expenses, including taxes, for the power plant. Once the plant is completed, the asset must be transferred to NPCIL for operation.
The power plant will be designated as a captive generating plant, granting the private entity full rights to the electricity produced. The private entity can use the electricity for its own power needs and also has the option to sell excess power to other users.
NPCIL emphasized that BSRs can offer a sustainable solution for reducing carbon emissions in industries that are difficult to decarbonize. This approach can help these industries save money on carbon-related taxes, making their products more competitive in the global market.
Companies that have shown interest
Tata Power, a prominent integrated power company in India, has announced its intention to venture into the nuclear energy sector once the government revises regulations to allow public-private partnerships in building plants and small reactors.
CEO Praveer Sinha stated, “Tata Power will enter the nuclear energy sector when the Union government establishes the necessary regulations and laws. Our decision is contingent upon the government’s policy direction and clarity on the partnership model with Nuclear Power Corporation of India Ltd (NPCIL).”
Similarly, state-run NTPC has revealed plans to establish a subsidiary dedicated to nuclear power generation. The company has already formed a joint venture with NPCIL for a 2,800 MW project in Mahi Banswara, Rajasthan, with an estimated investment of Rs 45,000-50,000 crore. NTPC’s Chairman and Managing Director, Gurdeep Singh, shared that the subsidiary would operate independently from the NPCIL joint venture, aiming to achieve a nuclear power capacity of 20 GW over the next two decades.
Other major companies like Reliance Industries, L&T, and Adani Group have also expressed interest in investing in the nuclear energy sector, as the government seeks investments totaling $26 billion.
The government’s initiative is part of India’s strategy to increase its nuclear power capacity from 8,180 MW to 22,480 MW by 2031-32, with a long-term goal of reaching 100 GW by 2047. In alignment with the latest NDC targets, India has committed to reducing the emission intensity of its GDP by 45 percent by 2030 compared to 2005 levels and achieving approximately 50 percent of its cumulative electric power installed capacity from non-fossil fuel-based energy sources by 2030.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.