Discovering Nuclear Energy For Justifying A Bad
Deal

Prabir Purkayastha

WE are having a discussion in the country on the
importance of nuclear energy to our energy basket only in the context of the
India-US nuclear deal. The government and the prime minister have gone into an
overdrive in order to sell the India-US nuclear deal, stressing on its
importance for India’s energy security. If indeed nuclear energy were so
important to India’s future, why is it that no serious techno-economic study has
ever been presented impressing upon us the vital importance of nuclear energy?

Currently, nuclear energy stands at 4,120 MW, which is
a little less than 3 per cent of our installed capacity of power plants. A part
of the reason has been the nuclear isolation we have faced and therefore the
much slower development of our program. However, this is only a part of the
reason. The other part is the techno-economics of nuclear power and its
relatively high cost.

The key issue is what is the total amount of power
that can be added using the nuclear route and what will be its cost? We shall
deal with the techno-economics of nuclear power later, but let us take up first
the possible proportion of nuclear energy, both in terms of its contribution to
electricity generation and as a proportion of the primary energy basket.

QUANTUM & COST OF NUCLEAR POWER

If we assume that we need to add about 100,000 MW in
the next 10 years, as the ministry of power is asserting, what is the best-case
scenario for nuclear power? According to the Planning Commission’s study
(Integrated Energy Policy, 2006, Planning Commission), taking the most
optimistic scenario, it is 15,000 MW by 2015 and 29,000 MW by 2021 (see Table
1). These targets include 8,000 MW of imported reactors. Even though these
targets have already been admitted as quite ambitious by the Planning Commission
(Planning Commission calls it the Optimistic Scenario), let us assume for the
sake of argument, that they can be met. Even then, nuclear energy will only add
up to about 7 per cent of our total installed capacity. And if we take the even
more ambitious figures that the government is now bandying about – 40,000 MW by
2020 – this will still be less than 9 per cent of our total installed capacity.
Figures such as 40,000 MW by 2020 have no relation to the actual capabilities on
the ground, or the need for huge amounts of capital for such a program, or the
cost of such power if these plants are set up. However, even by these
“optimistic” of scenarios, it is clear that that nuclear power is going meet
only a small part of our electricity needs. And as the techno-economics will
show, going ahead with such an ambitious nuclear electricity program will come
at a high cost and will dry up investments in other sectors.

Table 1: Planning Commission’s Optimistic Nuclear Power
Scenario

 Note: * Integrated Energy Policy,
Planning Commission, August, 2006,

 Table
2: Govt’s Current Optimistic Nuclear Power Scenario

In the 60s and 70s, there was a lot of euphoria about
nuclear power. By the 80s, it became clear that nuclear power was expensive. In
the West, nuclear plants routinely overshot their budgets and the time required
to erect them. With discovery of gas in large quantities and increased
efficiency of thermal power plants, nuclear plants were perceived to be too
expensive. This was quite independent of the debate regarding the potential
hazards, de-commissioning costs, and the problem of storing nuclear wastes.

The India experience is this regard has been no
different. Nuclear power plants are about 50 per cent more expensive, even when
using domestic technology and equipment. However, as they take a long time to
build, a large amount of capital is locked up during construction. If the plant
is built using a mix of equity and debt, this cost of locking up money is known
as Interest During Construction (IDC); the capital cost of building a plant,
without taking its IDC into account, is called “overnight” costs. All
conventional power plants are built with a mixture of debt and equity and this
is also the way Nuclear Power Corporation is proposing to build plants in the
future. Taking IDC for both thermal and nuclear plants, the capital cost of
nuclear power plants would be twice that of coal-based thermal power plants –
about Rs 7.4 crore per MW (about Rs 6 crore as overnight costs and 6 years to
construct the plants) for nuclear plants, as against Rs.3.73 crore per MW (Rs
3.2 crore as overnight costs and 4 years time for construction) for coal fired
plans. That means that the cost we incur to put up nuclear plants that will
generate 10,000 MW of nuclear power is far greater; with the same amount of
money we can put up 20,000 MW of coal-fired plants.

IMPORTED REACTORS WORSENS SITUATION

If imported reactors for nuclear power are considered,
the situation becomes even worse. The cost of nuclear plants, as overnight costs
is Rs 9 crore per MW. A number of studies have taken this as the base cost of
nuclear power plants. Though the nuclear plant suppliers have claimed a lower
figure, all existing plants have cost more than $2,000 per KW and therefore this
is a reasonable base for our calculations. Taking into account the IDC component
, this translates to Rs 11.1 crore per MW or three times the cost of coal-fired
power plants. In other words, with the same amount of money, we could put up
30,000 MW of coal-fired power plants instead of 10,000 MW of imported nuclear
plants. For a 40,000 MW nuclear power program, it would mean importing 20,000 MW
of imported reactors with 20,000 MW of indigenous reactors. This means an
investment of Rs 375,000 crore, which is equal to the total amount of investment
we have planned for the entire 100,000 MW in the next 10 years. Incidentally,
India’s total capacity addition in the last 10 years has been less than 40,000
MW, the figure that is now being proposed for nuclear power alone.

Table 3: Comparison of
Capital Costs and Tariffs Coal vs Nuclear

http://www.uic.com.au/nip08.htm for nuclear fuel costs.

Table 4: Cost of Nuclear
and Coal Based Power Stations

The cost of power from nuclear plants, as compared to
that from coal-fired plants, is also quite a bit higher. Coal-fired plants today
produce electricity at the plant end (not as delivered to the consumer) cost
about Rs 2.50 per unit depending on the coal cost at the location. For nuclear
plants with domestic reactors, the cost is about Rs 3.60 per unit. For imported
reactors, it is about Rs 5.10 per unit. If we take a figure for time of
construction of 8 years instead of 6, as is quite likely for imported reactors,
then the corresponding cost figures would be around Rs 5.50 for imported units.

Not only is nuclear power more expensive, investing in
nuclear power in a big way without addressing its techno-economics, will also
have adverse effects on the entire electricity sector. Going in for huge
investments for imported nuclear power plants – three times the cost of similar
coal fired units –– would mean starving the Indian economy of other investments.
It would mean either giving up much larger investments in the power sector or
starving other infrastructure sectors.

We agree that India should invest some money in
nuclear power plants. We have been under sanctions and have not received any
technology for nuclear power plants from anywhere in the world. Our scientists
and technologists have struggled very hard to develop every bit of our nuclear
technology indigenously. It has taken us almost 20 years to do this, once
nuclear isolation was imposed on India after the 1974 Pokhran I blast.
Therefore, this technology needs to be nurtured and developed further. Even
though nuclear power may not be economical today, it is possible that in the
long-term, as coal and oil reserves run out, nuclear energy will become more and
more important. But to argue that we should put in the major part of our
available money in to nuclear energy right now, that too with imported reactors,
seems to be very short sighted.

Those familiar with the nuclear power know that what
killed it in the US is not the hazards of nuclear power or disposing nuclear
wastes but simply its costs. It was too expensive to put up nuclear power plants
and the electricity out of it cost much more than from other sources. That is
why the last reactor commissioned in the US was in 1996 and it took 23 years to
build. The US nuclear industry today is surviving almost entirely on foreign
orders. And that is why they are looking to India for orders worth billions to
revive their moribund industry.

PARALLEL WITH ENRON AFFAIR

For those familiar with Enron, there is a sense of
history repeating itself. First, there is a political decision to give Enron a
2,000 MW project, then the fuel policy and power policies are changed to suit
Enron. The liquid fuel policy of using naphtha as fuel for power plants came out
of the need to accommodate Enron. Today, it is clear that such a policy, decided
without application of mind and the techno-economics of the sector, has resulted
in a major crisis for Maharashtra State Electricity Board and idling of plants
using naphtha. Unfortunately, a similar exercise is underway with respect to
nuclear energy. In order to justify the India-US nuclear deal, we are now
talking about 40,000 MW of nuclear energy, without taking into account its
capital cost or the price of electricity from such plants. If the MSEB crisis
was the result of adding a 2,000 MW Enron plant, we can only imagine what would
be the impact of introducing 40,000 MW of nuclear power and its high cost.

The talk of using imported nuclear reactors for
providing energy security is also misleading. Unlike the three-phase nuclear
cycle, which envisages the use of enriched uranium in Pressurised Water Reactors
(PWR), then using reprocessed plutonium of the PWR’s in Fast Breeder Reactors (FBR),
and finally plutonium and thorium mix in Advanced Heavy Water Reactors (AHWR),
the imported Light Water Reactors (LWR) plants use only enriched uranium. In
such a cycle, the requirements of uranium are much higher, and we would need
continuous imports of large amounts of uranium. If we concentrated, instead, on
the FBR and AWHR route, this would require much smaller amounts of uranium and
would provide much greater fuel security than the imported reactor route that
the Government is currently pushing.

One of the objectives of the US through this deal is
also to provide an immediate “easy” LWR route to India for nuclear energy
instead of developing FBR technology. It is interesting that it is only when
Department of Atomic Energy has now been able to commercialise its PWR
technology and scale it up to 540 MW that the US is now offering to lift
technology sanctions on reactors and fuel. Once we take this easy route, they
will then be able to control us through their control over fuel as well as
control over technology (spare parts, etc.). Therefore, developing the FBR route
and indigenous reactor technology would provide a much surer route to energy
security than taking the dependent route of imported reactors.

Table 5: The Approximate Potential Available From
Domestic Sources for Nuclear Energy

Source: Department of Atomic Energy quoted in
Integrated Energy Policy, 2006, Planning Commission, P 36

OUR ENERGY NEEDS

Electricity is only a part of our total energy needs.
We need fuel for transport and also for manufacturing fertilisers and
petrochemicals. The requirements of primary fuels would of course also depend
partially on what kind of fuel we use for electricity generation. However, it is
clear that in any scenario, the bulk of India’s electricity needs – from 91 per
cent as the best-case scenario to 95 per cent as per current plans – would have
to come from non-nuclear sources. For the foreseeable future, nuclear option is
going to have little impact on our need for other sources of energy.

Oil has been used in India primarily for transport and
industry. The Tenth Plan has this to say about the growth of hydrocarbon demand:
“The share of hydrocarbons in the primary commercial energy consumption of the
country has been increasing over the years and is presently estimated at 44.9
per cent (36.0 per cent for oil and 8.9 per cent for natural gas). The demand
for oil is likely to increase further during the next two decades. The
transportation sector will be the main driver for the projected increase in oil
demand. Consequently import dependence for oil, which is presently about 70 per
cent, is likely to increase further during the Tenth and Eleventh Plans.”

It has been estimated that by 2015, Indian demand for
crude oil would be around 4.25-4.5 million barrels/day (mb/d) and it would be
importing about 80 per cent of this, almost entirely from the West Asian region.
The important issue here is that if we look at the power sector demand, oil does
not figure in this. So nuclear energy, which can be used to produce electricity,
is not a substitute for oil under any circumstance. While India accounts for
only about 2 per cent of world’s oil consumption, it is already amongst the 10
largest importers of oil in the world. With increasing oil consumption, this
trend is likely to continue with India and China emerging as major importers of
oil accounting for at least 15 per cent of world’s oil demand. As there is no
way nuclear energy can go into trucks, buses and cars, the transport sector will
continue to be heavily dependent on imported hydrocarbons.

If we take nuclear energy as a fraction of the total
primary energy needs of the country, we find that this is not more than 3 per
cent to 5 per cent of our total primary energy basket (the 5 per cent to 9 per
cent of the electrical energy translates to 3 per cent to 5 per cent in primary
energy terms). If we look at oil and gas, even with an ambitious nuclear energy
program, they will still constitute more than 30 per cent and 10 per cent
respectively, and together more than 40 per cent of our future energy needs.
More than 40 per cent of our energy needs in the future is going to come from
oil and gas –– and this, independent of our nuclear energy program.

Therefore, the nuclear deal that has been signed
between India and the US will help us only marginally address our primary energy
needs. The argument that nuclear energy is the energy for the future is not
backed up by either an analysis of India’s energy needs nor does it take into
account that nuclear energy is an option very few countries are exercising
today. We definitely need to keep the nuclear option open, looking at possible
long-term needs; but to present this as a panacea for our current energy
requirements flies in the face of reality. If India has to take measures for its
energy security, its primary concern must be to secure oil and gas supplies. It
is in this context that peace and stability in West Asia is of such vital
concern for India; its delight in being seated at the international high table,
courtesy the USA, is just a diversion, and a harmful one that is against the
country’s national interests.