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Accelerating Power Sector Growth - Role of Nuclear Energy , Shri R V Shahi, Former Secretary, Ministry of Power

India Energy Forum organised its 11th Annual Conference at Delhi on 4th December, 2008. This year the theme was chosen to be "Accelerating Power Sector Growth - Role of Nuclear Energy". This theme was selected in view of the recent historic developments of India becoming a major player in the global nuclear club. In last few months, not only the Agreement with U.S.A. was approved by them but also our Team succeeded in the Safeguard Agreement with International Energy Agency and Agreement with Nuclear Supplier Group Nations. In the Inaugural Session, I had the occasion to present my views and we had addresses from Dr. D.V. Kapur, Sh. Anil Razdan, Secretary, Ministry of Power, and Dr. Anil Kakodkar, Chairman, Atomic Energy Commission and Secretary Department of Atomic Energy, who inaugurated the Conference. Shri Shyam Saran, Special Envoy of the Prime Minister on Indo-U.S. Nuclear Deal gave a Luncheon Presentation.

While the details of the various issues such as Challenges and Opportunities in Nuclear Option and CEO's Round Table on Accelerating Power Sector Growth together with Strategy for Growth in Transmission Systems were discussed in Technical Sessions, the inaugural programme itself covered extensively most of the issues. I outline below the various issues that were deliberated :

  • While introducing the subject, I articulated the following:

  1. In the last over fifty years of atomic energy programme we have been able to build a capacity of slightly over 4,000 MW which is less than 3% of the total installed capacity of power in the country. There have been various reasons, but limited availability of Uranium has been the most important factor constraining a more rapid growth of nuclear capacity.

  2. During the initial years, our technical experts did face difficulties in stabilising the operation of the nuclear power plants, but subsequently in the last ten years our experts have demonstrated that they can successfully operate these plants with performance at par with such power plants anywhere in the world. Therefore, in so far as the expertise and capability among our Engineers and Professionals for design, construction and operation of these plants is concerned, it has been fully established.

  3. In the beginning of the Tenth Plan, when our nuclear plant capacity was about 2,500 MW, we could operate these plants at more than 85% of their capacity and could achieve that high level of machine availability and Plant Load Factor. Subsequently, during the Tenth Five Year Plan, when the installed capacity progressively increased, due to commensurate quantity of additional fuel not being available, the Plant Load Factor progressively declined. At present, overall Plant Load Factor is less than 60%. In a way, our nuclear power plants have similar problems of inadequacies of fuel, and therefore low level of Plant Load Factor, just as our gas based power plants face the problem of shortage of gas resulting in Plant Load Factor being just around 60%. Power plants in both these categories could easily run at 85 to 90% Plant Load Factor, but they are forced to run at sub-optimal level for want of fuels.

  4. In India, among energy professionals, in fact, among the public at large, there is no controversy or confusion whether or not we should go in a big way to embrace atomic power plants in the power sector profile. There is overwhelming consensus that nuclear plants could provide safe and reliable power supply. No doubt, issues concerning management of nuclear waste, radiation and consequences from the point of view health and safety of people are raised. But, the larger picture is that people are convinced that we have been able to operate our nuclear power plants in a safe manner. The regulatory mechanism which takes care of issues concerning safe operations of these plants has demonstrated its strength and ability to ensure that power plants operators run these plants in the manner and with the caution that they need to.

  5. When Ministry of Power was formulating the National Electricity Policy, we discussed the draft concerning the role of Nuclear Power, with particular reference to the role of Private Sector. In consultation with the Department of Atomic Energy and with their consent the policy statement relating to nuclear power was finalised. It may be relevant to give an extract of the National Electricity Policy in this regard.

"5.2.19 Nuclear Power is an established source of energy to meet base load demand. Nuclear power plants are being set up at locations away from coal mines. Share of nuclear power in the overall capacity profile will need to be increased significantly. Economics of generation and resultant tariff will be, among others, important considerations. Public sector investments to create nuclear generation capacity will need to be stepped up. Private sector partnership would also be facilitated to see that not only targets are achieved but exceeded."

  1. It may be seen from the Policy Statement of the Government that there is a clear thinking and direction to step up nuclear capacity, to significantly increase the proportion in the total capacity (from the present 3%), to increase public sector investments in building up nuclear plant capacity and to facilitate private sector investments for increasing the capacity.

  2. Subsequently, when the Expert Committee on Energy Policy was set up by the new UPA Government in 2004, we deliberated at length the role of nuclear power in the overall energy development programme over next 25 years. The Integrated Energy Policy, which was finalised in August 2006, projects that when India's total installed capacity of power increases to over 800 GW, the installed capacity of nuclear plants should rise to about 7% of the total, which means by the year 2031-32, as per Integrated Energy Policy the nuclear plant capacity may be of the order of about 60,000 MW, up from 4,000 MW as at present.

  3. Therefore, while the role of nuclear power will, no doubt, significantly increase, it would still be playing a secondary role atleast in the next 25 years. Coal based power generation and hydro electric capacity, in terms of size, as also in terms of proportions, will obviously rank higher, though the proportion of coal based generation is bound to come down. And, that is how it should be in view of global concerns and India's commitments to go in for, as far as possible, clean and cost effective energy generation. Perhaps during the period beyond 2030, when we are able to perfect improved technologies and thereby overcome the problems concerning availability of fuels, the proportion by 2050 could be much higher.

  4. While the capital costs of nuclear power plants are, no doubt, higher, the overall economics of power generation is somewhat balanced because of comparatively much lower component of fuel cost. This has been the case so far. But, when we procure fuels from other countries we will need to keep in view the possibilities of price increases. Long term investments in nuclear plants, which are more capital intensive than other conventional power plants, can be a sustainable proposition provided there is sufficient safeguard tied up in terms of long term contract with guaranteed availability of fuel as also the nature of price variations over the period of contract. Gas based Combined Cycle Power Pants have taught us a very bitter lesson. In mid 80's and even subsequently these investments were made in gas based plants, which were to play a major role. But, it is the fuel which has let these plants down. Even on dual fuel arrangement, with the plant owners agreeing to use naphtha, the problem is not resolved because prices of naphtha have also demonstrated a highly erratic behaviour. Prices of naphtha, LNG etc. have reached, in the recent past, levels which were never thought of, thereby making investments in these plants unsustainable and unviable. In recent weeks there is some relief in view of crude price going below $ 40 a barrel.

  5. It has been reported in the Press that expansion of nuclear plant capacity, as per Department of Atomic Energy, will be under the overall control of Nuclear Power Corporation. No doubt, we do not have any other organisation in the country having experience in this field. Yet, this approach may not be fully justified if we wish to achieve the types of expansions that we have discussed. No sector can afford to plan its growth strategy around only one organisation. Unless, we facilitate entry of a number of organisations in the nuclear field, our ambitious targets of 60,000 MW by 2031 may be difficult to achieve. The report that wherever Nuclear Power Corporation forms a joint venture with another public sector company, it will necessarily have 51% equity and therefore control. Even this approach does not seem to be fully justified. At the most, if our concerns for safety and security compel us to move on these lines, such an arrangement can be only an interim solution, may be for the next two to three years. The sooner we get out of this approach better would be the prospect for achieving what we are targeting.

  6. During the initial years of Tenth Plan we were definitely talking in terms of bringing about amendments to the Atomic Energy Act 1962. We need to pursue this even if for strategic reasons, and for the reasons to assure the world, and particularly the Nuclear Supplier Group Nations, that sufficient safeguards are being provided to ensure compliance of various commitments. The approach of keeping the operations under Government control for the initial few years will need to be supplemented by various options of organisational framework. If at all the concern is that the compliance of these commitments could be under question if private sector participation is allowed, the answer to such an apprehension could be further strengthening of our regulatory framework - with more people, better trained experts and more empowerment to them. This will ensure better compliance of what we need to comply than just keeping the operations under only Government public sector company.

  • Dr. Anil Kakodkar, in his keynote speech, gave an elaborate presentation of India's nuclear programme so far, the exercise that involved negotiation with the U.S.A, International Energy Agency and Nuclear Supplier Group Nations:

  1. The biggest constraint in the development of large capacity in India has been on account of limited availability of Uranium. As already explained, even the present capacity in operation faces the shortage of fuel, and as a result, they are running at much lower levels of capacity utilisation.

  2. In respect of Pressurised Heavy Water Reactor Technology, we are matching global benchmarks of performance. We have succeeded in reducing the cycle time of construction and therefore gestation period compared with best in the world. Capital costs of these projects are comparable with the best power plants set up during contemporary periods elsewhere. Availability of plant and machinery is among the best. Nuclear Power Corporation has achieved global standards of performance and has received global rewards for best professional operators world wide. Our Scientists and Engineers have adequately demonstrated their knowledge and expertise of designing and operating nuclear power plants.

  3. The Nuclear Power Corporation, over the period of time, has improved its project management capability. It completed Units 3 & 4 of Tarapur Atomic Power Station and Unit 3 of Kaiga Power Station in five years with substantial savings in cost and reduction in gestation periods. These are internationally comparable performance parameters.

  4. The vision of Department of Atomic Energy envisages a total nuclear power capacity of the order of 20,000 MW by the year 2020. During the Eleventh Plan (2007-12) eight indigenously designed 700 MW Pressurised Heavy Water Reactors and 10 Light Water Reactors of about 1,000 MW each are being targeted. In addition project activities for setting up four Fast Breeder Reactors (FBR's) and one advanced Heavy Water Reactor are also being planned. The four FBR's would be taken up in the Twelfth Plan (2012-17). It is expected that first FBR may be commissioned in 2010-11 itself, when it will be the second largest Reactor in the world.

  5. The break up of 20,000 MW by 2020 would be 10,000 MW PHWR, 8,000 MW imported Light Water Reactor and 2,500 MW Fast Breeder Reactors. Even in today's scenario Uranium has been a problem including problems on account of local area mining operations and it is in this background that we are trying to tie-up fuel supplies from various sources.

  6. On July 18, 2005 the joint statement between the Prime Minister of India and President of U.S.A. laid down fundamental principles of nuclear cooperation. The following are the highlights of these fundamental principles.

  • India is a responsible country with advanced technology. This recognition for India is on the basis of our past performance and behaviour which has exhibited fully responsible approach with regard to the discipline of possessing and operating nuclear technology.

  • Behaviour of a responsible country means that we will preserve nuclear technology in a manner that it does not go into wrong hands leading to wrong use. It means that safety of international standards would be maintained, nuclear materials will be controlled, and nuclear facility will be physically protected.

  1. When we embark upon large scale capacity expansion, we will obviously need to enhance the industry capacity for manufacturing. This requires a very systematic approach. Unless the industry is assured of regular orders for supply of equipment over a period of time, it would be unreasonable to expect that they would invest in developing capacities in a sustained manner so as to meet our needs of expansion.

  2. Technology development should constitute an important aspect of our strategy. National strength has to be backed up by our own technical strengths leading to national capability. It is rather unfortunate that in the consumer goods segment we have not been able to keep our brands alive. Because of large influx of technologies from various countries to manufacture consumer products, age old Indian brands have virtually vanished.

  3. Continuous research and development are fundamental to emergence of new technologies with more advanced features, and better cost effectiveness leading to consumer acceptance and satisfaction. Since this could not be adopted as a strategy and style of dealing with technology in consumer goods segment, India has lost to others. In the field of nuclear energy, substantial emphasis is being given to research for technology development.

  4. The Nuclear Power Corporation has been able to demonstrate by simultaneously taking up construction of 9 Units at 5 different locations. It is, therefore, quite feasible that in a period of nine years, 6 Units - a pair of two in first five years, another pair of two in subsequent two years and the last pair of two in the final two year period could be planned. If we could take up project implementation, with such an approach, at six sites, in a period of nine years definitely we could complete 36 Units. This means 36 Units of 1,000 MW each giving a total of 36,000 MW in a period of nine years. This is no doubt ambitious. But it is possible. We will need to tie up a number of inputs which will include construction agencies of high standards in quality, parts and components from various vendors with required quality standards to be maintained and above all gearing up of required resources and project management monitoring mechanism.

  5. Thorium Technology is the appropriate future strategy. We need to have indigenous solution and that is being attempted. Our ultimate aim is Nuclear Recycle. Same Uranium, which can support 10,000 MW of capacity, will be able to support 500,000 MW through this process.

  6. While we are projecting ambitious but achievable targets for capacity addition, we must keep in mind that unless nuclear power is competitive with other forms of power including power from coal based plants, gas based plants, hydro electric plants etc., its acceptability will be an important concern. Therefore, it seems that with the type of technology and strategy that is being considered, in the long run nuclear power will be fully competitive with other power.

  • Shri Shyam Saran gave a special luncheon address and highlighted the nature of discussions and negotiations in last four years which have culminated into Nuclear Agreements. Salient points of his address are outlined below:

  1. The genesis of nuclear cooperation may be traced to the strategic relationship which developed with European Union in 2004-05. It covered important issues such as Security, Aid Eradication, Rural Democracy and Climate Change.

  2. India can achieve 8 to 10% growth in a sustained manner over next 20-25 years. Major constraint, however, is energy. If it is made available to push such growth, it is possible to achieve double digit GDP growth. If, however, we are unable to provide the required amount of energy we will have difficulty in achieving such a rate on a sustained basis.

  3. Promotion of nuclear energy is a very important component of our energy strategy. Considering the availability of other sources of energy, for us it is not a matter of choice. To adequately meet the need we have got to depend in a significant way on nuclear energy.

  4. So far as other countries are concerned, from their own prospective it is worthwhile for them that India is facilitated to adopt nuclear energy as an important element of its energy strategy. This is not only for commercial reason but for also climate change considerations.

  5. It was articulated by India in discussions with European Union that India has an excellent record of dealing with sensitive technology like the atomic power as a responsible country. We could conclusively establish that there was no example of any wrong use of this technology. It is on the basis of these facts that nuclear energy was put on Bilateral Agenda with the European Union. An Energy Panel was set up with representatives from both India and European Union.

  6. Similar debate was mirrored in Prime Minister's Agenda with United States in 2005. We used the same arguments. Even though U.S.A. had not put up a single nuclear power plant during previous many years, in view of the petroleum fuel price increases, President Bush had already decided to pursue nuclear plants by then. India - U.S. Energy Panel was accordingly set up.

  7. India - U.S. Civil Nuclear Cooperation will reopen resumption of new era in negative list. There are many other technologies and technology related inputs which had gone beyond access for India and Indian industry and business in view of the sanction. They will all have a new opening now.

  8. It must be clarified that our understanding with the U.S. is on the basis that (a) we will not accept any kind of restriction on our strategic programme, (b) our own R&D Programme should not be hampered, and (c) our Agreement should not remain only Bilateral Agreement, but it must cover 45 Nuclear Supplier Group Nations.

  9. In the India specific Safeguard Agreement with International Energy Agency and Agreement with NSG, the concern relating to restriction on our strategic programme and on our R&D have been fully addressed in the same manner, as in relation to the understanding with the U.S.A.

  10. These developments have unfolded, no doubt, enormous opportunities. But, we need not hype it out. Though the Nuclear Power Corporation is saying that by 2020 a capacity of 20,000 MW could be achievable, the Chairman of Atomic Energy Commission had himself suggested that a capacity of the order of 40,000 MW by 2020 and 60,000 MW by 2030 were feasible. Assumptions, however, are that (a) we need to have reprocessing facility, (b) human resources, and (c) capacity building in manufacturing should support such an expansion.

  11. Atomic Energy Act has not so far been amended but balance of plant offers great opportunity.

It appears quite clear that the recent developments on the nuclear front would, no doubt, enable India to access fuels from various countries, yet, even in the next 25 years the proportion of nuclear capacity will only be in the range of 6 to 7% of the total capacity. The cost of nuclear power will be an important issue. Power tariff will have to be competitive and that would require crashing of construction schedules so that the capital cost is kept within limits. Long term fuel arrangement with assured availability and predictable price behaviour will be necessary. There could be problems on this front. Large investments without full assurance of fuel at reasonable costs would be inadvisable. Only Nuclear Power Corporation will not be able to deliver the ambitious programme. Its efforts will have to be supplemented by other public sector companies and also by private sector companies. We do need to initiate amendment to the Atomic Energy Act to facilitate public private partnership.