PUSHING THE WRONG ENERGY BUTTONS
04, Mar 2020
Prelims level : Economics – Infrastructure - Road, inland, Railway, Aviation Mains level : GS-III Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
- In the backdrop of the recent visit of the US President to India, the joint statement highlighted the setting of up of 6 nuclear reactors at Kovvada, AP by Westinghouse.
- This article flags some of the issues with respect to the deal setting up nuclear reactors.
- In March 2019, India and USA agreed to set up the long-pending 6 nuclear reactors in Kovvada, Andhra Pradesh.
- Under the agreement, the US Company Westinghouse Electric will sell 6 AP-1000 nuclear reactors to India.
- AP-1000 reactors are light water reactors where fuel used is U-235. Ordinary water acts as both coolant and moderator.
- The Westinghouse electric will supply the nuclear reactor technology and NPCIL will be responsible for construction and operation of the plant.
Problems Associated with these Projects:
1. High Cost
- Electricity from American reactors would be more expensive than competing sources of energy.
- According to estimates the first year tariff for electricity from nuclear reactors is about Rs. 25 per unit. In comparison the wind and solar energy costs have declined by around 70% to 90% in the last 10 years and are estimated to be around Rs.3/unit.
2. Safety and Civil Liability
- Given the experience of Chernobyl and Fukushima nuclear reactors are prone to serious accidents.
- In this context the operator of the reactor would be responsible for compensation and not the supplier. This is true after India ratified the Convention of Supplementary Compensation for Nuclear Damage in 2015.
3. Past Experiences
- The past experience of setting up imported reactors such as Tarapur reactors in Maharashtra and Kudankulam reactors in Tamil Nadu has been poor as they have faced repeated shut downs.
- For instanceTarapur reactors and Kudankulam reactors produced just 32% and 38%, respectively, of their capacity in 2018-19.
India’s Civil Nuclear Cooperation – In Brief
- In the aftermath of 1998 Pokhran Test India faced a nuclear isolation across the world.
- This changed after the 2005 Indo-US Civil Nuclear Agreement.
- In addition India also signed an agreement with IAEA in 2009 to place its civil nuclear facilities under IAEA safeguards. (IAEA Additional Protocols)
- This paved the way for US companies to engage in nuclear commerce with India.
- However despite the Indo-US nuclear deal, the nuclear liability regime in India was seen as hurdle for foreign companies to invest in India’s nuclear sector.
- The major hurdle for companies to do nuclear commerce with India was the Civil Liability for Nuclear Damage Act, 2010 (CLINDA) which held the suppliers of nuclear power projects liable in case of nuclear accidents.
Ratification of CSC:
- This was solved in 2016 when India ratified the Convention of Supplementary Compensation.
- This marked India’s willingness to accede to international nuclear liability regime which holds the operator liable to pay up for damage in case of nuclear accidents. (However it provides for operator to have the right to recourse with the supplier in the contract)
- Besides India has also launched an insurance pool with a liability cap of ₹ 1,500 crore to cover the suppliers’ risk of potential liability.
- As a result of this, foreign companies have showed interest in nuclear commerce with India.
- Accordingly India has signed civil nuclear agreements with 14 countries including USA, France, Russia, Canada, Argentina, Australia, Sri Lanka, the UK, Japan, Vietnam, Bangladesh, Kazakhstan, South Korea and Czech Republic.