Many industry stalwarts are upbeat over the prospects of India´s domestic nuclear industry after the ´breakthrough´ announced by both sides over the Indo-US Civil Nuclear Deal. But there are a number of issues that have to be gone over with a fine toothcomb, before we can uncork the bubbly.
First, let´s look at the total capacity addition that all these proposed American nuclear plants will bring to the table. Including the Mithi Virdi and Kowada projects, we´re talking about a total capacity addition of around 16,000 MW. For comparison, our solar energy target alone is 100 GW (by 2022). And the long gestation period of nuclear projects means that these capacities will take years to come on board. Second, Obama has pushed through a clause by executive fiat which allows India a waiver from compulsory tracking of all nuclear material supplied by America under the deal. The next US dispensation may not be so favourably inclined towards letting India off the tracking hook.
Third, India will set up an insurance pool to pay out any compensation arising out of a mishap. But this additional insurance burden will only serve to hike the cost of nuclear power being produced under such an agreement. The Department of Atomic Energy feels that the cost of nuclear power from the proposed Mithi Virdi (Gujarat) nuclear project backed by Westinghouse is already on the higher side.
Fourth, the US domestic nuclear industry has been stagnant, with the last new nuclear plant entering service way back in 1996. As American nuclear players explore greener pastures, it is India that should be calling all the shots while inking any deals. Fifth, sanctions-hit Russia is ready to build 10 nuclear reactors in India. The rouble has fallen to the level of the Indian rupee. And both countries have agreed to proceed with their energy deals in their own currencies, which will help India save billions in foreign exchange.
Sixth, the Fukushima disaster has made a number of countries turn their backs on nuclear energy. Germany has decided to phase out all its nuclear plants by 2022. As of August last year, the bill for the Japanese clean-up has crossed $105 billion, and the pieces are still being picked up.
What I am looking forward to is the cooperation between America and India on renewable energy. The US has already committed $2 billion in renewable energy investments, and this is a win-win deal. India will move closer to meeting its aggressive renewable energy targets, and the US will create more jobs in its green energy sector. There will also not be any opposition to setting up of these green installations, as compared to the rough weather that nuclear projects will inevitably face.
I am no nuclear Luddite... but the writing on the wall is there for all to see, if one looks close enough at the fine print.