By Bill Linton, Principal, Linton Consulting

The Republic of India is the world’s second most populated country and its largest democracy. A country of dramatic contrasts, India has a huge, diverse population with many cultures, languages, religions, and economic fortunes. With 1.2 billion people, it has over 3.5 times as many people as the U.S. and its middle class population is now some 250 million! It is a land where prosperity – even opulence – industrialization and advanced technology co-exist with extreme poverty, outdated agrarian practices, and class disparities. Many millions live without clean water, reliable electricity, or health care. Because India is growing rapidly in population (1.24 percent annually) and industrialization, its energy and power industries are struggling to bridge the demand-supply gap.

India is also a nuclear country, both as a weapons state and generating a significant amount of nuclear power. While the country today operates 21 nuclear power plants with another six under construction, it is making plans for many more. In 2012, it generated some 1,053 TWh of power overall, about 3 percent from nuclear. The country’s energy policy calls for 25 percent of electricity to be generated from nuclear power by 2050. This will be an enormous challenge, but India is a vast and rapidly growing country. We discuss many of India’s opportunities and challenges for its nuclear power sector below.

History

A brief look at India’s history, demographics and culture provides a helpful perspective on its economic situation and that of its power industry. According to Fareed Zakaria, it has “at least 15 major languages, hundreds of dialects, several major religions, and thousands of tribes, castes, and subcastes.” While its civilizations date back for thousands of years, it has only become a great power in the past century. In the 1700s, European trading companies became most interested in the subcontinent, and several established themselves there to foster exchange with Europe. In the mid-1700s, Britain’s East India Co. gained prominence. During the 1800s, India became a subject of the Empire and was governed directly by the British government. For Britain this was profitable as India became a captive resource for raw materials and products. In 1947, it gained its independence, but was partitioned with the separation of East and West Pakistan and later West Pakistan, which became an independent country, Bangladesh.

The 1,000-MW Kudankulam nuclear power plant connected to the grid for the first time in October.

India’s intention of becoming a nuclear state began early, perhaps driven by its desire to remain a sovereign entity and avoid domination by others as it had experienced in the previous century. In 1946, the first Atomic Energy Research Commission was established, led by an early visionary and “father of India’s nuclear industry” Dr. Homi Jehangir Bhabha. In 1948, a law was passed mandating government ownership of all the country’s uranium and thorium. In 1956, India started its first research reactor, and by 1960, the second was brought online, a 40-MW unit. Initially, the U.S. and Canada aided its nuclear program. In 1963, construction began on its first commercial nuclear power station. In 1969, two GE BWRs were brought online (Tarapur 1 and 2). India’s close association with Canada opened the country to heavy water reactors, with the first of these commercial units brought online in 1973 at Rajasthan 1. What happened next locked in the pressurized heavy water reactor (PHWR) technology that now comprises over 80 percent of its installed base.

With the growth of nuclear technology worldwide in the late 1960s, the Treaty on Non Proliferation of Nuclear Weapons (NPT) was developed and ultimately signed by 59 countries. India announced in 1967 that it would not sign the treaty. To date, neither India, Israel, nor Pakistan have ever been signatories, and North Korea withdrew from the Treaty in 2003. In 1974, India tested its first atomic bomb. Consequently, technological support from the U.S. and Canada stopped and all cooperation ended. At this point, India became very isolated from the rest of the world in its development and application of nuclear technology. Using its own engineers, India was able to complete its Rajasthan 2 reactor, a design originally provided by AECL of Canada. It took almost a decade to bring the reactor to completion without Canada’s aid. By 1984, India added two reactors at Madras, Kalpakkam 1 and 2. These were based on modified heavy water designs. By 2007, India had 17 reactors generating 4 GW of electricity. These are small units by today’s standards (less than 500 MW each), and more recent reactors have been significantly larger.

By 2008, through renewed efforts between the countries, the U.S. and India signed a bi-lateral trade (1-2-3) agreement, opening the way for transfer of nuclear technologies. Recently, Prime Minister Manmohan Singh described the signing of the agreement with the U.S. (that was finally approved in 2008) as one of the best moments of his career. This deal effectively ended the stifling sanctions imposed since the mid-1970s. The agreement, along with India’s acceptance into the Nuclear Suppliers Group, opened up its markets to the outside world. As a result, Canadian, French, Russian, U.S. and other suppliers are now aggressively pursuing commercial nuclear trade with India.

Technology

Due to its unique nuclear history, India developed its own heavy water reactor technology including a strong competency in production of heavy water. Its affinity with the Canadian reactor industry that also specializes in PHWRs has again brought mutual interest in trade. There are few, if any, places in the world where heavy water reactors are as prominent. These reactors arguably claim some safety and operational advantages over PWRs, such as not requiring refueling outages, as well as greater fuel cycle flexibility. This means heavy water reactors can more easily utilize lower enriched uranium, reprocessed fuel, and potentially thorium.

Some believe it is important for India to diversify its reactor technology to include various vendors and technologies. Naturally, it is considered better not to put all its eggs in one basket in case of technology or vendor difficulties. So it now appears that the country will be taking a more diverse path for its future.

State of the Electric Power Industry

India today has 21 operational reactors located at seven stations with a generating capacity of some 5 GW. While the number of reactors is significant, it is only about 3 percent of electricity generation. At the same time, there are six reactors totaling over 4 GW that are under construction with startup dates between 2014 and 2016. The central government is targeting 27 GW by 2023, a huge leap.

Today the country does not have enough power generation capacity to meet demand. Brownouts and rolling blackouts for load shedding are a regular occurrence in many parts of the country, often in the evenings between 5 and 10 p.m. Because of its strong growth rate and rising standards of living, continued high growth of demand for electric power is forecast. But, because of the need to diversify away from coal (now some 70 percent) and to clean up the environment, nuclear and hydropower are favored.

In spite of its very active nuclear power development and construction programs, India will struggle to meet its generation growth targets and improve its electric supply reliability. Investments on the order of $40 billion have been identified for every form of generation and significant improvements in the electric power grid.

Bringing in outside technology and assistance will be necessary if India is to meet such aggressive growth targets. For these reasons, the country is now looking increasingly to the outside world for modern nuclear power technology and, where available, for investment capital. Talks are ongoing with Rosatom, GE, Westinghouse, AREVA, and others.

The Kudankulam 1 reactor is the first of two new reactors to be brought on line. It is a Russian VVER-1000 design and brings the number of operating reactors in the country to 21. Kudankulam 2 is also underway and 3 and 4 are in the planning stages. The majority of new reactors under construction are domestic PHWRs, which are now in the 700 MW class. In addition to the four currently in construction, numerous additional units of this design are anticipated over the coming decade. RD on a larger PHWR domestic design of 1,000 MW is also reportedly underway.

India has a Prototype Fast Breeder Reactor (PFBR) under construction that will be used to produce reprocessed fuel from spent fuel and waste products. Its nuclear RD includes an advanced heavy water reactor technology that will use thorium as a fuel. Construction is expected to start soon on this unit. Planning is also underway for its second nuclear fuel fabrication plant and for a new nuclear plant site in Haryana that is expected to contain four new 700-MW PHWRs. An official ceremony was held in January 2014 in which Prime Minister Singh laid the foundation stone for the new reactor site.

The 1,000-MW Kudankulam power plant connected to the grid for the first TIME IN October 2014.

Government Leadership

India’s nuclear power industry is completely owned and run by the federal government. Operating organizations include Nuclear Power Corporation of India Limited (NPCIL), Department of Atomic Energy (DAE), and the Atomic Energy Regulatory Board (AERB), the nuclear regulator. These organizations control the industry and are thought-leaders in policy development. India is famous for its government bureaucracy and red tape. Since government entities typically don’t have commercial experience, it is considered unlikely that they can create an export industry for their technology similar to South Korea’s or Russia’s. While the domination of the industry by government entities will inhibit export of nuclear technology, however, other well-known players such as Tata, Reliance and Larsen Toubro do have commercial and export experience and have expressed interest in growing their sales of components and services globally.

National policy today favors nuclear power as a growing share of total generation planned to be 25 percent by 2050. India’s own heavy water technology developed during its two decades of isolation is a source of national pride. While most do not want to see its local technology pushed aside, it will be important to bring in more outside vendors if the nuclear program is to be modernized and growth challenges met.

Nuclear Safety

Nuclear safety in India is considered quite good. This is not to say that there have not been incidents through its many years of nuclear operations. With increased scrutiny globally following Fukushima, some are asking, “How independent is the AERB?” It has been described as an understaffed government agency that oversees other state-owned nuclear agencies in a pro nuclear regime. Some wonder if the present structure creates sufficient oversight and healthy tension between organizations to achieve a strong safety culture.

In spite of India’s current membership in IAEA and WANO, its unwillingness to sign the NPT many years ago has hampered freedom of exchange. IAEA had not performed visits to Indian nuclear power facilities until recent years and still has limited oversight. India has not had audits and inspections of all of its facilities. In IAEA’s audit of Rajasthan in 2012 – the first by IAEA – it stated that India’s reactors are among the safest and best, but there is room for improvement. Specifically, the report suggested improvements to electrical cabling and fire protection systems. Additionally, the report said the rest of the world could also learn much from India.

India’s participation in WANO may be hampered in that Indian nationals are not free to visit or benchmark all nuclear sites such as in the U.S. or Japan. This limitation is because it does not participate in the NPT. Dr. S.K. Jain, an Indian nuclear industry leader, recently retired as head of NPCIL and is now chairman of WANO’s Tokyo Centre and a member of its board. It is hoped that he will be able to foster closer ties and advance the safety agenda of WANO.

A benefit to the opening of nuclear markets is increased cooperation and exchange between regulatory bodies of leading nuclear countries. It is believed that a more open market in India will also enhance its safety culture.

Public Opinion

Public opposition and demonstrations against nuclear power sites have been increasing in India in recent years. This has been especially true of the first Russian-built Kudankulam reactors. No doubt the Fukushima accident in Japan has had an unsettling effect. The subcontinent of India has seen tsunamis of its own and people are increasingly fearful that Fukushima-type events could happen in India. There are also NIMBY (“not in my backyard”) issues. Locals are demanding better compensation for plants being located near their homes and communities. They are increasingly resisting being pushed around by their own government, as well as being suspicious of foreign corporations.

It seems that the increased involvement of large corporations from outside of India has spawned some of this opposition. There is a deep mistrust of multinational corporations in India since the Bhopal accident of 1984 in which many thousands were killed and many more injured by a chemical leak. Some say that India’s nuclear industry has not been transparent to the public and not properly informed them either of their plans or of plant safety processes.

Nevertheless, there is strong support for nuclear at the federal level by current Prime Minister Singh. Not only have aggressive targets for more nuclear power been set, the country has recently announced a new research center known as the Global Centre for Nuclear Energy Partnership. It’s goal is to bring together Indian and international scientists from all over the world for research and training programs.

Liability

Perhaps it was the memory of Bhopal that led the government of India to pass one of the most stringent liability laws of any country. This liability challenge has become a common complaint of global suppliers as they look to enter India. As currently written, there are still open questions about whether this law can require a vendor to be liable for a nuclear accident not caused by them directly. This could create a liability so serious as to negate all potential for profits, regardless of cause. The fear is that if an accident were to occur, regardless of who is at fault, there could be a swift judgment against a foreign corporation that would require payments to injured parties for unknown amounts and indefinite periods of time. All the large reactor vendors are quite concerned about this legislation and several are in discussions for special deals or exemptions.

Prime Minister Singh has said that he believes western companies are misinterpreting the law and that the fine print can limit a supplier’s liability. One view from India’s side is that the role of a supplier in an accident has to be proven before recourse can be required.

There does not seem to be talk of amending the law and many authorities are advising caution. The issue has proven to be a major obstacle to foreign participation in the nuclear industry. Recently, Singh traveled to Russia where discussions included nuclear liability. Kudankulam 1 and 2 contracts were originally signed before the liability law went into effect. Russian authorities want the two future units to be grandfathered, but that still remains unclear.

Supply Chain

With most of India’s reactors being developed indigenously for many years, the country developed its own nuclear supply chain. However, if increased importation of technology occurs, we are likely to see increased purchases of nuclear components, products and services from outside of India. At the same time, the country has set a policy of localization as a requirement of doing business. AREVA and Westinghouse have agreed to localize their content as an incentive for their reactors to be built in India.

Is India poised to become a global exporter of nuclear technology and equipment? The general consensus is that the country’s own demands will probably consume more resources than its industry will be able to supply.

According to Jonathan Hinze, Senior Vice President of Ux Consulting, a firm which tracks worldwide nuclear development and provides forecasting, export of India’s nuclear equipment may occur on a case-by-case basis. There could be selected products such as Larsen Toubro’s steam generators or other components that could compete in the global market. However, he believes India will not sell into the global market to the same degree as China. Hinze states that “India will likely be lagging behind China in its track record and global acceptance of its quality assurance standards.”

Fuel Challenges

Access to supplies of nuclear fuel is one of India’s biggest challenges. There is very little indigenous, economically recoverable uranium. While thorium is much more abundant, the technology for use of thorium is still in development. NPCIL is looking to sign agreements with several large suppliers ranging from AREVA to Cameco to Russian suppliers and others. These global suppliers could provide fuel in conjunction with favorable opportunities for the use of their reactor technologies. Kazakhstan, the world’s largest supplier of uranium, recently agreed to be a major supplier for India’s future.

Another outgrowth of India’s fuel challenge has been to create an emphasis on spent fuel reprocessing. This need has pressed the country to develop its own fast breeder reactor so it can employ a closed fuel cycle. This will also move them closer to a waste management solution. Today, spent fuel is shipped to reprocessing sites and stored there awaiting a final solution.

The Future

India’s stated energy policies call for accelerated use of all domestic conventional energy sources including coal, hydro, oil gas, nuclear, wind solar, and conservation. Significant development of both nuclear and hydro is being planned.

While India’s federal government is targeting 27 GW of nuclear power by 2023 and much more by 2050, some question the viability of such a goal. Will India be able to grow its nuclear power industry as aggressively as demand growth and policy require? Some believe these targets are too optimistic and perhaps, unrealistic. As with many countries in recent years, plans for nuclear development have often been overstated and development seems to occur much more slowly than policy makers envision.

Will India reconsider its liability law and deal reasonably with overseas suppliers, thereby attracting the latest technologies and favorable investments from the global industry? It remains to be seen if the perceived economic benefits will tip the scale on policy to attract the international nuclear participants needed.

Financial, legal and resource concerns aside, India has enormous need and continues in active development of power generation assets and infrastructure. Perhaps it’s going to take more time than predicted to build these plants. If that’s the case, it means we are a long way from seeing India’s electricity crisis resolved. Nevertheless, India has become a very interesting long-term market for global nuclear suppliers.

Bill Linton is Principal of Linton Consulting, a professional practice focused in energy, power, nuclear, and manufacturing industries.

Input for this article included IAEA and World Nuclear Association resources and interviews; and included a detailed discussion with Jonathan Hinze, Senior Vice President International of the Ux Consulting Co.

More Nuclear Power Internaional Issue Articles
Nuclear Power Internaional Issue Archives
View Power Generation Articles on PennEnergy.com