Privatisation of Nuclear Power: Significance & Barriers Associated

• India’s move to open the civil nuclear sector to private players aims to bridge funding gaps and speed expansion, as nuclear supplies only ~3% of power against the 100 GW target for 2047.

India’s Nuclear Energy Landscape

Nuclear Capacity and Generation

• Current Capacity: India operates 25 nuclear reactors across seven power stations with a combined installed capacity of about 8,880 MW.
  • Share: Nuclear power contributed ~3% of India’s total electricity generation in FY 2024-25.
• Future Targets: India aims to reach about 22.5 GW of nuclear capacity by 2031-32 and targets 100 GW by 2047
• Reactor Types: Most reactors are indigenous Pressurised Heavy Water Reactors (PHWRs), supplemented by a few Light Water Reactors (LWRs) imported from Russia and the United States.

Uranium Supply

• Uranium Imports: Imports primarily come from Kazakhstan, which supplies nearly 80%, along with Russia, Uzbekistan, Canada, and Australia.
• Domestic Reserves: India has about 4,25,570 tonnes of natural uranium, mined by Uranium Corporation of India Limited (UCIL) mainly in Jharkhand and Andhra Pradesh.
• Overseas Mining: Stakes in uranium mines are being explored in Namibia, Mongolia, and Kazakhstan.

Popular Courses

Legal and Policy Framework

• Legal Framework: The Atomic Energy Act, 1962, restricts nuclear power generation and operation to the central government and its PSUs.
• Liability Law: The Civil Liability for Nuclear Damage Act (CLNDA), 2010, specifies supplier liability provisions following the India-US nuclear agreement.
• Safety Regulator: The Atomic Energy Regulatory Board (AERB) oversees safety, licensing, and regulatory compliance for all nuclear installations in the country.
• Fuel Cycle: India follows a closed fuel-cycle policy, allowing the reprocessing of spent fuel and the scientific management of nuclear waste.

Significance of Private-Sector Participation

• Capital Mobilisation: Corporate entry is expected to help close the USD 26 billion funding gap for the first 11,000 MW expansion phase.
• Project Execution: Engineering firms are likely to adopt a “Fleet Mode” approach to bring gestation periods down from 10-12 years to about 5 years.
• Technology Deployment: Private participation may accelerate the rollout of Small Modular Reactors (SMRs) and move development from site-specific construction to factory-produced units.
• Manufacturing Depth: Large industrial manufacturers can resolve supply-chain constraints and expand domestic forging capacity for Reactor Pressure Vessels (RPV) and Steam Generators.
• Cost Competitiveness: Market competition is projected to move tariffs toward ₹4-5 per unit through higher Plant Load Factors (efficiency) and lower operational overheads.

Structural Barriers for Private-Sector Participation

• Liability Risks: Section 17(b) of the CLNDA imposes unlimited supplier liability, making insurance coverage nearly impossible.
• Financing Costs: Exclusion of nuclear power from India’s Green Taxonomy blocks access to low-cost Green Bonds. The current FDI policy prohibits investment in the nuclear energy sector.
• Revenue Uncertainty: Estimated generation costs of ₹6-8 per unit discourage private operators, as DISCOMs seldom sign Power Purchase Agreements exceeding the ₹4.50 threshold.
• Land Acquisition: Strong local resistance to large nuclear projects (e.g., Jaitapur protests) causes delays and uncertainty that private investors cannot absorb.
• Operational Limits: The Atomic Energy Act confines private firms to “construction-only” roles, denying the Build-Own-Operate model needed to manage operational risks and control the fuel cycle.

Way Forward

• Liability Reform: Amend the Atomic Energy Act (1962) for BOO models and revise CLNDA 2010 Section 17(b) to enable insurable, internationally aligned liability.
• Financing Unlock: Include nuclear in India’s Green Taxonomy and allow calibrated FDI for SMRs, manufacturing, and fuel-cycle partnerships to mobilise low-cost capital.
• Tech Acceleration: Fast-track SMRs and Gen-IV R&D under the Nuclear Energy Mission (₹20,000 crore), adopting factory-built fleets to reduce costs and delays.
• Manufacturing Strength: Expand domestic forging for RPVs and Steam Generators, and foster NPCIL-private joint ventures to secure critical nuclear supply chains.
• Revenue Stability: Implement viability gap funding and long-term offtake guarantees to achieve competitive nuclear tariffs (₹4–5/unit) and support base-load clean energy.

Private participation, backed by strong regulation and technology, can make nuclear energy India’s clean baseload power, driving energy security, climate goals, and technological leadership by 2047.

Reference: Business Standard | PMFIAS: Nuclear Energy: Benefits, Challenges & Way Ahead

PMF IAS – Pathfinder for Mains – Question 440

Q. “India’s nuclear governance must evolve before its nuclear capacity can expand.” In light of proposed private-sector participation, critically evaluate the preparedness of India’s institutional, regulatory, and safety mechanisms. (250 Words) (15 Marks)

Approach

• Introduction: Write a contextual introduction about the nuclear sector.
• Body: Evaluate the preparedness of India’s institutional, regulatory, and safety mechanisms, key challenges and way forward.
• Conclusion: Emphasis on institutional, regulatory, and safety reforms for effective private participation.