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Editorial | November 2013

Nuclear inflection point

India´s well documented energy demand has propped it up on international platformsùand this time, it is because of its appetite in nuclear energy. In a recent development, India is at various stage of negotiations with US, France and Russia for development of nuclear energy plants and equipment supply for the reactors. Countries and their companies are busy reading maps of China and India the two fastest growing nuclear markets.

India must see the recent US-India handshake on nuclear energy cooperation as one of the biggest international opportunities it can get to prioritise its plans in energy independence. This would mean drawing up concrete strategic plans on building nuclear capabilities and simultaneously addressing political, social and diplomatic concerns. Such a strategy has sadly eluded us we seem to wait until protests go out of control before bulldozing a decision because of the investment made.

Kudankulam, which went on-stream on 22 October, is the most recent but by no means singular example. The ministries of atomic energy, power, heavy industry, and information and broadcasting must get their heads together beforehand to chart out such an implementation strategy.

The opportunity also arises because with all the hue and cry, and even with abundant thorium resources, India is at best a fledgling nuclear nation, with only 2 per cent of the generation from that source. India´s only nuclear power operator Nuclear Power Corporation of India (NPCIL), which owns and operates all the nuclear power plants in the country, has signed a deal with Westinghouse, the American nuclear reactor supplier, and others like French company Areva and Russia´s Atomstroyexport are expected to follow the track soon. This would eventually pave the way for NPCIL to add 6,000 MW, entailing an investment of about $14 billion.

However, nuclear suppliers are unhappy with the country´s nuclear liability policy issues. Although much of the media documentation has focused on the liability clause as a sticking issue in the US-India deal, the clause equally applies to domestic suppliers. Local suppliers have sought relief from liability on the grounds of having local manufacturing facilities, which are already cleared by competent authorities for supplying for nuclear energy. Domestic players must contribute to NPCIL´s mammoth plan of 60,000 MW by 2030 in nuclear segment, so it is critical that the blocks are removed.

According to the Asian Development Bank´s (ADB) latest report ´Energy Outlook for Asia and the Pacific´, India´s energy sector will need $2.3 trillion in investments by 2035. ADB also said that energy pricing is a ´core problem´in India, which has a bulk share of consumption and requirement of energy development in South Asia.

With a definitive move on nuclear generation and gas pricing, we are once again entering a tormenting period of anticipation between clearance and action. A section of the private sector may be somewhat in denial, but most of the months this year carried an array of developments in and around the power sector. Nevertheless, in the business-as-usual scenario, the final energy demand of India is projected to increase at an annual rate of 2.7 per cent from 2010 to 2035, a slower rate compared with projected GDP growth rate of 5.7 per cent hitherto. Coal, though, will remain the predominant fuel for power through 2035.

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