Pvt Sector Nuclear Power Entry Delayed, Need Urgent Reforms

India’s green transition in the energy sector will hinge upon achieving this goal in the nuclear energy sector. But it cannot be done without dominant private sector participation.

However, private sector giants engaged in nuclear energy, like Reliance, Tata, Adani, and Jindal, currently face policy gaps that have the potential to hinder the country’s overall progress towards the ambitious target.

The last Union Budget promised to support the government’s Nuclear Energy Mission, with a new focus on Small Modular Reactors (SMRs) and Bharat Small Reactors (BSRs). This has set the stage for what can be called a nuclear quantum leap.

A Nuclear Dream Powered By Private Investment

The current numbers are not at all negligible, as India operates 24 reactors with an 8,180 MW output. However, compared to the 100 GW goal by 2047, the current scale of operation cannot even be called fractional.

There is a long, arduous path to be traversed. But if the country manages to get closer to the target by 2047, then nuclear power will be a burgeoning sector.

Power producers won't be reaping the benefit of this potential windfall alone. There will be forward and backward economic linkages of the sector.

Every manufacturer of reactors, turbines, control systems and cooling tech will gain, once the nuclear supply chain comes alive.

In this long road towards energy security, the government’s opening move has been the Bharatiya Saksham Reactor (BSR) programme. It allows private firms to build Pressurised Heavy Water Reactors (PHWRs) for captive use.

This model intends to reduce demand uncertainty and to admit only serious players with deep pockets. Strict entry norms have been created to keep fly-by-night operators at bay.

Policy Speedbreakers

Despite the intent to expand horizons, however, the nuclear energy sector continues to encounter several regulatory and procedural hurdles.

A recent SBI Capital Markets report observed that unless approvals are streamlined and incentives raised to a certain level, along with clear demarcations of cost allocations, the private sector is unlikely to hop on to the nuclear energy bandwagon.

The existing process of getting various approvals is painfully slow, because the process itself is sequential. One cannot apply for the next approval unless the previous one is cleared. This takes months and sometimes years to procure. There is no "ease of doing business" here.

There are also questions involving the cost of production: Who will pay for transmission upgrades? If the Department of Atomic Energy is unable to supply the required fuel or heavy water, then who will bear the loss?

The answer lies in a transparent cost-sharing mechanism, which is currently missing. The lack of transparency in pricing and compensation clauses means that investors will have huge exposures to unpredictable risks.

There are stumbling blocks at the state level as well. State governments have considerable approving power over land and water supplies. Any delay at the state level, therefore, often stalls projects for political or bureaucratic reasons. This also needs to be addressed.

The existing Atomic Energy Act, still tilted towards a government monopoly position, is laden with ambiguities around liability, oversight, and foreign participation.

Thoughtful amendments, enabling up to 49 per cent FDI and robust public-private partnerships, are under active discussion, but till now, the progress is lethargic.

Future Of Net Zero & Energy Security

The scope of nuclear power is not just restricted to meeting rising power demand. Rather, generating more nuclear power is also pivotal to India’s Net Zero target by 2070.

Growing renewable energy thrust alone cannot ensure reaching this destination on time. A sustainable green architecture of reliable and carbon-free baseload power must be sufficiently complemented by adequate and stable nuclear power.

Global foreign investors and technology providers are visibly keen to enter the vast Indian market. However, they are still sceptical about India’s outdated laws and regulatory ambiguities.

Sooner these stumbling blocks are removed, the better for the overall growth of the sector.

Policy Boosters For A Way Forward

An urgent streamlining of the approvals process should be the priority reform in the policymaking timeline.

Next would be charting a clear framework for cost-sharing and pricing mechanisms. Compensation for supply failures has to be an integral part of that framework.

State governments need to be incentivised for expediting clearance processes at their end. Rewarding better performers always works well for the system.

Updating the existing Atomic Energy Act will be the magnet to attract private investment and foreign participation.

Last but not the least, history shows that there is no alternative to providing sovereign guarantees and tax waivers if the long-term goal is to de-risk potential investments.

Taking a policy path in this direction can unleash private capital, innovation and global partnerships on an unprecedented scale in India’s nuclear power sector. Failure to address the policy gaps, on the other hand, can take the fizz out of nuclear power growth in India.