Case for private sector nuclear power

There is much rejoicing (and some groaning) over the Bush-Manmohan agreement giving India full access to nuclear fuel, equipment and technology. US Congress may stall Bush’s request for waiving the existing legal hurdles. But Russia and France have long been stopped only by US opposition from selling nuclear materials to India. With Bush lifting that opposition, suppliers will queue up at India’s door from France, Germany and Russia, even if not from the USA.

Our private sector giants like Reliance Energy and Tata Power will also queue up to build plants. Now that we have agreed to completely separate civilian and defence facilities and accept international inspection, the security argument for a government monopoly in nuclear power is dead. We must welcome private nuclear generation, as in the West. Private sector plants will be the best test of whether nuclear power is economic without implicit subsidies, something yet to be established.The old Indian nuclear establishment is unhappy, since it remains stuck in the siege mentality that began afterPokharan-1 in 1974. It was asked to make India a nuclear weapons power and electricity generator using indigenous resources alone. It had to keep out the dreaded foreign inspectors who would expose the dirty truth that India’s civilian and defence programmes were one and the same.The scientists succeeded, and this was a major strategic achievement. But they never had any commercial orientation. They got unlimited money with no commercial controls or penalties. Their task was to make India a self-sufficient nuclear power at any cost, not to compete commercially.However, self-sufficiency soon proved illusory. India’s uranium mines are depleting rapidly, and cannot meet the demand of even reactors under construction. Imports have become inescapable.

This is by no means the main reason for India seeking US support. India has long demanded acceptance by the nuclear club as a responsible nuclear power. That has now been given, and with it the right to import all nuclear materials. This has upset old-style scientists who want carry on as before, importing uranium but nothing else. Now they will have to face global competition in equipment, technology and fabrication, and they do not like that. The last thing they want is to see Westinghouse, Areva and Siemens exposing them as second-rate.

Till now, the personal interest of scientists and the national interest have co-incided. But no longer. India’s GDP is slated to rise 30-40 times by 2050, according to the BRIC report. Fossil fuels may run short, so India needs competitive nuclear electricity. This means tapping the best nuclear supplies in the world, not the best that Indian scientists can provide indigenously. Almost certainly it means that the Indian establishment, long hailed as a hero of self-sufficiency, will be exposed as uneconomic, obsolete, and perhaps unsafe.Global experiences (sketched in an excellent survey in The Economist, July 7th) shows that the viability of nuclear power is unclear, partly because of widespread government guarantees and subsidies. Nuclear plants cost twice as much as coal-based plants, but have very low operating costs. If a nuclear plant is built in five years with no time overruns, and operates at least 80% capacity, then it provides cheaper power than conventional thermal plants. But construction delays or poor capacity utilization (for design or safety reasons) can make nuclear plants hopelessly uneconomic. In the USA, nuclear plants have been dogged by delays and operational problems, making some of them white elephants. So too in India France has become the most successful nuclear generator in the world. Its strategy has been to build a large number of plants based on standardised designs. This has lowered capital costs, and reduced delays and operational glitches. By contrast, the Indian programme has been marked by several models. Taparur began with 160 MW reactors using enriched uranium. Then our own scientists built a series of 220MW plants using natural uranium. They are now building 540 MW reactors at Tarapur. Meanwhile the Russians are building 1,000 MW light water reactors at Koodankulam.

The Nuclear Power Corporation (NPC) claims that it has standardised 220 MW plants, and like France can now build these cheaply without delays. But is it globally competitive? Nowhere else in the world are such small nuclear reactors used. To reap economies of scale, France has been using reactors of 1,300 MW and 1,450 MW. No Indian fabricator can come anywhere near this.Do not be misled by the claims of patriotic scientists. In a capital-intensive business, old depreciated plants (like NPC’s) always look economic. This does not mean that new plants without subsidies or depreciation are competitive.That strengthens the case for unsubsidized private sector nuclear plants. Corporations will carefully choose the plants with the least cost and glitches. If they choose Indian reactors, I will eat crow. But if they choose foreign reactors, let the NPC eat crow.

What do you think?