Energy Security, Energy Policy And Nuclear Energy

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 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.


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.


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

Installed Capacity (2005)
Fuel MW


Thermal 81,681 66.4
Hydro 31,865 25.9
Nuclear 3,310 2.7
Renewable 6,158 5
Total 123,014  

Thermal Mix Fuel Terms

Fuel MW


Coal 68,308 83.63
Gas 12,172 14.90
 Oil 1,202 1.47



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.


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.


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.


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.