Energy Security, Energy Policy
And Nuclear Energy

Prabir Purkayastha

ONE of the justifications given for
India’s Iran vote in International Atomic Energy Agency (IAEA) was that India’s
future energy interests demand a decisive shift to nuclear energy and the US
support in removing the sanctions on India is strategically vital. This has been
dressed up further to argue that India’s self-interest lies in lining up with
the US on the Iran issue and the Left is somehow not nationalist enough to
realise this. The problem with this set of argument is that even if we take the
most optimistic of nuclear energy predictions and a pessimistic hydro-carbon
scenario, nuclear energy can at best meet about 5 per cent of
India’s primary energy needs by 2015 while the hydrocarbon
requirements are about 40 per cent. If we take the current Planning Commission’s
estimates, then nuclear energy would at best meet less than 3 per cent of our
energy needs. Oil and gas are far more important
in energy terms than nuclear energy and therefore if energy security is an
issue, Iran and supplies of hydrocarbon from there is far more important than
chasing after nuclear energy. In any case India had other options in negotiating
for nuclear energy, particularly as the United States has not ordered any new
nuclear plant since 1978 and completed the construction of the last one it
ordered in 1996. It is itself short on technical capability in the construction
of nuclear plants.

ENERGY SECURITY
IN INDIA  

Energy security is very much like
food security. If we do not have enough food to feed our people, we are then
dependent on those who have the necessary surpluses. In mid 1960s, India had to
import food under PL 480 programme from the US. We still remember the kind of
pressures India was subjected to by the US as it could not face the prospect of
food riots in India if the US had turned off the food supplies. Our going in for
subsidies for fertilisers and power was not out of a desire for equity but the
necessity of increasing our food-production to protect our sovereignty.
Securing energy supplies is no less critical, and with the West Asian region
emerging as more and more the major supplier of oil and gas supplies world-wide,
this area is vital to our energy security. One of the reasons that the UK has
been a partner of the US in West Asia is that lacking any other source but West
Asia (other European countries have the alternative of Russia and the Caspian
Sea area), the UK has decided to ride on the coat tails of the US to safeguard
its supplies.

One of the problems in discussing
India’s energy security is that India does not have an overall vision of its
energy needs. India had a fuel policy till mid eighties and has a policy
document — Hydro-Carbon Vision 2025 for the oil and gas sector and has some
perspective plans for the power sector. However, there is no document that
outlines India’s a holistic view its energy needs: This situation is further
compounded by the fact that India’s energy needs are handled in the government
by five independent departments: a) Petroleum b) Power c) Coal (as a part of
Mines and Minerals) d) Nuclear (as a part of Atomic Energy) e) Non-conventional
Energy. Therefore, current discussions regarding energy security and exercising
the nuclear option as against a Gas Pipeline from Iran is taking place in a
policy vacuum.

It is not that a policy vacuum is
uncomfortable for the powers that be. It allows any construction to be put
forward without having to consider any existing frame of reference. It was a
similar policy vacuum in the 1990s that saw India switch to a short-lived
naphtha/LNG route for power generation — 12,000 MW plan using an accelerated
hydrocarbon fuel route. It is now public knowledge that the real driver of such
policies — again without any public discussion — was Enron backed by
powerful support from the US State Department and the Indian finance ministry.
The current sudden turn for nuclear energy that this administration seems to be
arguing for is, again without any public discussion on what India’s energy needs
are and the best way of meeting them.

INDIA’S ENERGY NEEDS

Before we examine what India’s
energy needs are, it is important to look at what are the elements of the energy
basket. One of course is the classical divide between commercial and
non-commercial energy. There is little doubt that, with monetisation of the
rural and economically backward areas, increasingly commercial energy is
replacing other forms of fuel. In the commercial energy sector, we need to
distinguish between primary sources –such as oil, coal and gas — and secondary
sources such as electricity, which also consume primary fuels. Therefore, before
we look at the primary sources of energy, we should examine what are electricity
needs so that we can translate the same into primary energy.

Various estimates have been made
about India’s power requirements. While the Department of Power has estimated
that India needs close to 50,000 MW every five years (these are the Energy Power
Survey estimates), in actual practice, the increase in demand has been in the
range of 25,000 MW-30,000 MW for the last 15 years. The power sector additions
in installed capacity in the last two plan periods have not exceeded 18,000 MW,
some of this gap has been filled by costly captive generation using diesel sets.
Even if we take 60,000 MW as the minimum requirement in the next 10 years, India
needs to reach an installed capacity of about 185,000 MW from the current base
of 123,000 MW.

MIX OF DIFFERENT
SOURCES OF ELECTRICITY

India’s current mix of different
sources of electricity is given in the table below.

Installed Capacity (2005)

Thermal Mix Fuel Terms

It can be seen from the above that
India’s power sector has a preponderance of thermal (66.4 per cent) with some
hydro (25.9 per cent). The proportion of nuclear energy in the installed
capacity is very low – about 3 per cent, lower than even renewable. Though
nuclear does produce more energy than the renewable (due to the low plant load
factor of renewable), its proportion in the total electricity generated is also
around 3 per cent; its impact on the Indian power scene is relatively marginal.

One significant factor in the
current thermal mix is the emergence of gas as a major source. Starting from
almost nothing in the early 1990s, today it is about 15 per cent in the thermal
mix (about 12 per cent in the total energy mix) and is the fastest growing
sector to boot. With plans for LNG terminals and the discovery of gas in
different parts of the country, it promises to be an important future fuel. Of
course, this still leaves open whether we should use only indigenous sources of
gas or go in for imported pipeline gas or LNG, but there is little doubt that in
any future scenario, gas would be an important fuel.

SCENARIO FOR
NUCLEAR POWER

If we take into account the
additional 60,000 MW (our estimates) or 100,000 MW (Department of Power’s
Estimates) that need to be added, what is the best-case scenario for nuclear and
what is a reasonable scenario needs to be examined further. If we take the
best-case scenario for nuclear power, India could add about 30,000 MW of nuclear
power by 2015 (Dr Arunachalam, former Scientific Advisor and now a Fellow in
Carnegie Mellon University, US, has talked about adding 30,000 MW by 2015). The
problems with such a trajectory are the following:

• 
  The three stage fuel cycle that
  we have been working on by which our main fuel would be thorium is not ready
  and this programme will have to dependent on natural uranium or enriched
  uranium

• 
  Available natural uranium in
  India can sustain at most a programme of 10,000 MW for the life-cycle (40
  years) of these plants

• 
  A small group – the Nuclear
  Suppliers group — can turn off natural or enriched uranium supply as has
  already happened for the Tarapur reactors.

• 
  Annual planned addition in the
  Tenth and the Eleventh Plan is around 500 MW currently against 3,000 MW
  required under this scenario an immediate and a sudden increase of 6 times.

• 
   Even if we take the most
  conservative of figures, the capital cost per MW of nuclear power is in the
  range of 6 crore per MW as against 2.5-3 crore for gas and about 4 crore for
  coal.

PROBLEMS OF
NUCLEAR PROGRAMME

If we want to introduce nuclear
power so aggressively, as Arunachalam and others are arguing, we would have to
take a host of decisions each of which are deeply problematic. We would have to
complete an accelerated feasibility report including safety aspects of all the
nuclear plants that we want to set-up virtually within a few months. We will
have to jettison our independent fuel cycle on which we have worked for more
than three decades. We would put in a huge investment in nuclear power, which
will leave us vulnerable to the Nuclear Suppliers Group and their pressures. And
for a country, which claims that it does not have enough resources for making
public investments in the power sector, we would be committing capital for
30,000 MW of nuclear power, which could fund about 45,000 MW coal-fired plants
or 60,000 MW gas-based plants.

Realistically, even if we did
decide to fast forward the nuclear option, the task of multiplying of our
capacity additions by 6 times – from 500 MW to 3,000 MW is not a feasible
option. The Tenth and Eleventh Plan projections indicate that the installed
capacity planned for nuclear power would be the order of 10,000 MW by 2015 or a
share of around 4 per cent of the total. Even if we consider Arunachalam’s
aggressive policy, it would amount to not more than 15 per cent of our installed
capacity being nuclear. The picture does not radically change even if we take a
20-year planning cycle into account; nuclear energy is unlikely to contribute
more than 15 per cent of our power sector needs in the foreseeable future, even
by the most ambitious of possible nuclear programmes. As we shall see later, the
proportion of nuclear energy in the primary energy basket is less than 3 per
cent using Tenth Plan estimates and about 5 per cent using the ambitious
Arunachalam programme. This is not surprising considering our lack of primary
fuel for the nuclear fuel cycle: a situation unlikely to change till the thorium
cycle is mature. And that is not in the offing in the near future, nor can any
long-term commitment of this magnitude be made for nuclear energy unless we have
indigenous fuel for this sector. The Nuclear Supplier’s Club is small and can
turn off the supply spigot much more easily than for any other fuel.

VULNERABILITY OF NUCLEAR
PROGRAMME

The vulnerability of the nuclear
program to a small set of countries was the specific reason why
India embarked on a three-phase development of its fuel
cycle. The PL 480 programme and the arm twisting
that the US did on that occasion followed by the US reneging on its Tarapur
commitments to supply enriched uranium fuel made clear that unless India is
self-sufficient in food and energy terms, it would jeopardise its independent
foreign policy. Both the fuel policy, which was based on coal as the primary
fuel for power generation and developing the nuclear fuel cycle based on
indigenously available thorium, came from this consideration. While signing the
nuclear deal may have widened India’s energy options, if it means abandonment of
India’s original goal of nuclear fuel security, it would indeed be at a heavy
cost. This is particularly galling as India has already paid a heavy price after
the Pokhran blast in 1974 and invested enormous resources for its fast breeder
reactors and thorium route.

The flip side of this coin is that
if we did manage to put in a nuclear programme of this size, with the kind of
budget constraints that this government has been complaining, it would mean
throwing out of all other forms of investments in the power sector. An
investment of this magnitude in nuclear power (about 40 billion dollar) would
leave the kitty bare for any other state investment in power. An ambitious
nuclear energy programme therefore would mean a much smaller over-all power
programme. So before we embark on a programme of this magnitude, the country has
to have a serious debate on the pros and cons of such a policy and some
comparative costs to the economy of such a trajectory. Certainly, such a policy
should not emanate from the exigency of signing a defence or a nuclear agreement
with the US.