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India's desperate pursuit of nuclear energy will be expensive and risky. Small wonder industry wants to dilute its liability
Under the winter sky of January flamboyant French President Nicolas Sarkozy sat next to Indian President Pratibha Patil and watched the Republic Day parade last year. Eight months later India and France shook hands to sign an agreement on civil nuclear cooperation. Business followed diplomacy. French company Areva agreed to set up two nuclear reactors in India and supply fuel for them.
This year the chief guest at the Republic Day function was Kazakhstan President Nursultan Nazarbayev, an unfamiliar face in India. Kazakhstan has one of the largest uranium ore reserves. It has joined the list of India's nuclear friends. Last month it was Mongolia, another uranium-rich country.
Other countries that have signed civil nuclear agreements with India in the past 18 months are usa, South Korea and Russia. "Diplomatic ties should be made with any big or small country with resources and that includes the 45 nations in the Nuclear Suppliers Group," said T P Sreenivasan, former governor for India at the International Atomic Energy Agency in Vienna.
Ever since the Indo-US nuclear deal signed in October last year lifted 34-year-old global sanctions that denied India access to the international atomic energy market, including uranium, Delhi has been on a shopping spree, buying nuclear fuel and reactors (see India goes shopping ).
When US Secretary of State Hillary Clinton visited Delhi in July this year, India said thank you for lifting sanctions by assuring usa a deal to set up two nuclear power plants, in Gujarat and Andhra Pradesh.
India wants to expand its nuclear power by 15 times (from 4,120 MW to 63,000 MW) by 2032, according to the Planning Commission's 2006 integrated energy policy report. In terms of the percentage of the total energy mix, the nuclear share will double from 3 per cent to 6 per cent. "We hope to touch 7,000 MW by next year," said S K Jain, chairman and managing director of India's public sector nuclear utility Nuclear Power Corporation of India Limited (npcil).
Hopeful of resumption of uranium supplies, the Atomic Energy Commission, that governs India's nuclear sector, launched four 700-MW nuclear reactors in August. npcil has signed an agreement for another 2,000-MW nuclear plant. India has 17 functional nuclear reactors and five are near completion.
Till a few years ago, nuclear energy was dirty business, fraught with risks and cost overruns. But growing concern over global warming has conferred upon it respectability overnight since carbon emissions from nuclear power plants are negligible. The nuclear industry has even coined a phrase for the change in sentiments nuclear renaissance.
"For us it is not renaissance; we never stopped in our endeavour for nuclear energy," said Jain. The world's nuclear suppliers had imposed sanctions on India after the Pokhran blast in 1974, stopping uranium supplies for its reactors. The uranium ore in India is of poor quality and it was running its nuclear power plants at 50 per cent capacity. "But the India-US deal will give us the opportunity to meet our targets," said Jain.
The ultimate goal is to reach a stage where India can use its abundantly available nuclear fuel, thorium. That is the third stage of India's three-stage nuclear programme formulated 50 years ago by nuclear physicist Homi Bhabha, who had established the Atomic Energy Commission.
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The first phase envisaged setting up pressurized heavy water reactors and running them on uranium available in the country. In the process some of the uranium gets converted into plutonium, which is recovered from the spent fuel.
In the second stage, fast breeder reactors use a mix of recovered plutonium and depleted uranium. A blanket of thorium is put around the reactor, and some of it converts into uranium, which is extracted. In the third stage, uranium converted from thorium is used to fuel power plants. India is entering the second stage and it will take at least 20 years before it can generate electricity by using thorium. Reactors running on thorium are yet to be developed.
But setting energy targets is easier than meeting them. Even if India gets uranium immediately and overcomes the fear Chernobyl and Three Mile Island accidents evoke, several bottlenecks remain. Long timeframes and delays are one. Nuclear energy is capital-intensive and delays result in cost overruns, making it even more expensive.
For any foreign company to set up shop in India it will take a couple of years for regulation clearances and approvals. Add another minimum 10 years for a reactor to be ready. Only Russians, who have been working with India and have their designs approved, are likely to set up reactors within four-five years.
Even in countries India is looking to for cooperation nuclear projects are marred by delays. In a recent ranking of nuclear utilities in the US, ranking service Moody's ranked the proposed nuclear reactors poorly in terms of viability due to cost overruns.
The second bottleneck is technology. Fast breeder reactors necessary for the second stage of India's nuclear programme are fraught with financial and health risks.
Plutonium used in them is 30,000 times more radioactive than uranium-235 used in heavy water reactors. Fast reactors generate a lot of heat in very small volume and use molten metals, like liquid sodium, to remove the heat. Since sodium burns on contact with air or water, a leak can be dangerous. These reactors are also costly to build and maintain, though they partially solve the problem of disposing of plutonium-rich spent fuel.
Worldwide, fast breeder reactors have been abandoned. The Superphnix reactor in France was shut down in 1997 after a sodium leak and a roof cave-in. Russia began constructing one in 1987 but did not finish it. Japan shut down its Monju reactor after a fire caused by a sodium leak. The US and Germany pursued large breeder programmes for several decades before abandoning them. Amusing? Consider this Germany sold its US $5 billion worth fast breeder reactor to a Dutch entrepreneur who converted it into an amusement park.
Scientists are working on advanced versions of fast reactors but they are not yet commercially available. "We aren't going to get much on the technical front. Countries would set up reactors on a turnkey basis, but won't give away their technology," said R Ramachandran, member of the Prime Minister's Council on Climate Change.
India's logic behind pushing for fast reactors is to be able to convert thorium into uranium. A prototype fast breeder reactor is under construction in Kalpakkam in Tamil Nadu.
M V Ramana, physicist at the Princeton University in usa, is not optimistic of its success. "The three-stage nuclear programme was an idea from the 1950s when no one knew that breeder reactors would be a technological failure, expensive and prone to accidents, and that reprocessing would be so costly," he said. "If the country does have to go nuclear, it should stay with heavy and light water reactors."
There is another hurdle.
The US has linked India's access to the enrichment and reprocessing technology, needed for the thorium stage, to signing the Nuclear Non-Proliferation Treaty. Australia has also refused to sell uranium to India unless it signed the treaty.
Ultimately, it is economic viability that will determine the success of nuclear energy projects. Financing up-front investment for nuclear plants is a challenge even in industrialized countries.
Nuclear energy in India is being supplied by heavy water reactors. A study by Ramana in 2007 showed the Department of Atomic Energy (dae) heavily subsidizes npcil to provide cheap heavy water (Rs 12,000 per kg). "Atomic energy is unlikely to be economically competitive if the true cost of producing heavy water is taken into account," wrote Ramana. Besides, cost overruns due to delay in construction of nuclear reactor are also borne by dae, and that keeps the price competitive with coal-fired thermal power plants.
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| Fast breeder reactors, crucial for the second stage of India's nuclear programme, have been abandoned across the world after accidents or cost overruns | |
Data available for construction of reactors at Kaiga and Rajasthan showed that even with an experience of setting up heavy water reactors, the cost overshot. While Kaiga was estimated to cost over Rs 730 crore, it ended up costing nearly four times (Rs 2,896 crore). The Rajasthan reactor was estimated at Rs 711 crore and cost Rs 2,511 crore. They were delayed by five-six years.
In 2004, dae projected a cost of Rs 3,400 crore for the prototype fast reactor in Kalpakkam and completion by 2010. An untested design, this reactor is unlikely to be finished in time and budget, said Ramana. A former head of dae had also warned of slips in the schedule and cost uncertainty, he added.
Imported reactors are not going to be cheaper. Areva's light water reactors are likely to cost India US $9,000 per kW, said Praful Bidwai, a political analyst and member of the Coalition for Nuclear Disarmament and Peace, a national network of over 200 organizations. This is way beyond India's estimate of US $3,000-4,000 per kW, he added.
Managing waste from nuclear reactors is another expensive proposition. Being highly radioactive, the waste needs constant monitoring. The half-life (the period in which radioactivity halves) of plutonium-239 is 24,400 years and that of uranium-235 is 710 million years. Though the economic lifespan of a reactor is only 30-40 years, it remains hazardous for thousands of years. Decommissioning a reactor is costly. "If one is just going to dig a deep hole and put the waste inside it, there will be enough money. But not if you think about monitoring it for the tens of thousands of years," said Ramana. Of the total cost of a reactor, 20 per cent is set aside for waste management, said S Thakur, executive director of npcil.
So what will a unit of electricity produced by nuclear plants cost? A rough estimate is between Rs 4 and Rs 6. This is close to Rs 3-4 per unit by coal plants, but only after including the heavy water subsidy and cost overruns underwritten by dae. Hydel power costs much less and renewable much more (see Cost of Electricity). "Use of imported (cleaner) coal has hiked the cost of thermal energy to Rs 6 a unit," said Ramachandran.
Power sector analyst and member of the Delhi Science Forum, Prabir Purkayastha, estimates nuclear energy will be more expensive. "Without including fuel and operation cost, the cost per unit would be Rs 7 to Rs 8. If we add to this the fuel cost, which is 25 per cent of the cost, it becomes evident that nuclear renaissance is fast disappearing from Western countries and India is the only possible dupe for the West," he said (see Who is building reactors?).
Despite these odds the nuclear industry is hopeful of a renaissance. There is more to its optimism than growing energy demand and climate change. It expects the customer nations to dilute its liability in case of a nuclear accident. "We are hoping to see action on nuclear liability legislation that would reduce liability for American companies and allow them to invest in India," US Assistant Secretary of State for South and Central Asian Affairs, Robert Blake, told a House committee in June.
India is yet to take a stand on liability; it is drafting the bill governing civil nuclear liability. Many believe the bill, being hastened to please the US, was instrumental in lifting nuclear sanctions.
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| Producing nuclear energy is viable only if the operator's liability in case of an accident is limited. This means passing on risks to the public | |
Nuclear companies will not invest in India unless liability is capped and fixed not on the supplier but on the operator. At present the operator in India is npcil. Areva also made it clear that France will not move ahead on the nuclear agreement unless the civil nuclear liability bill is passed. Although Areva is owned by the government, it is a listed company with private and public shareholders and is run like a private company. "The French government will not bail us out in case of an accident, so we have to insure ourselves through the liability bill," said Patrick Teyssier, marketing and strategy director at Areva.
If Areva gets its nuclear plants insured through an insurance company, the cost of electricity generation can go up three times. According to a report prepared by the Austrian ministry of environment in 2007, if Europe's largest nuclear utility, Electricit de France, were to fully insure its power plants with a private insurer using a liability limit of 420 million (US $610 million), it would pay an insurance premium of 0.019 cents/kWh. But if there is no ceiling in place, the premium would be 5 cents /kWh. This would increase the cost of generation 200 per cent. So nuclear energy is a viable option only if liability is diluted. In other words the risks and costs are passed on to the public. Small wonder former US ambassador to India David Mulford even lobbied for an ordinance in case India could not enact the liability law quickly.
Though the details of the draft are not clear, the bill is said to indemnify the private player so that it does not have to go through what Union Carbide did in the Bhopal gas tragedy. Union Carbide shelled out US $470 million to the victims, while the Indian government estimated losses at US $3 billion.
Speculations are that the bill limits the liability of the operating company to US $450 million as per the Convention on Supplementary Compensation for Nuclear Damage or even less. India will have to ratify the Convention (see Liability regimes. Damages beyond this amount will be paid by the Indian government. "Why should suppliers go scot-free?" asked Anil Chaudhary of the Coalition for Nuclear Disarmament and Peace. "Everyone involved in the process of producing nuclear energy should be held equally liable," he said.
India's opposition parties, bjp, cpi and cpi(m), said they will oppose the bill if it does not make all parties liable.
Austria, for example, had extended the liability regime to suppliers of equipment and other parties involved in transporting or dealing with nuclear fuel and waste. It did not cap liability either. A public vote in 1978 halted Austria's nuclear programme for lack of a radioactive waste disposal plan.
India Inc also wants a share of the nuclear business and is pushing for limiting liability. Reliance, Tata Power and Larsen and Toubro are interested. At present, private sector is limited to supplying equipment; it cannot have stakes in management. ficci submitted a paper to the government earlier this year recommending legislative and policy changes to allow private participation. The recommendations include fdi in the sector and the liability bill.
The accident at the Chernobyl reactor in Ukraine in 1986 demonstrated that the economic, environmental and health consequences of a nuclear mishap are extremely serious. The unofficial estimated death toll after the Chernobyl mishap was 65,000; damages were worth US $250 billion. Even 10 years after the accident, Ukraine's neighbour Belarus continued to spend over 10 per cent of the state budget to mitigate Chernobyl's effects.
In India, health hazards from nuclear power plants have always been swept under the carpet. In 2007, physicist V Pugazhendhi of the Doctors for Safer Environment released a study on the incidence of auto-immune thyroid disease among women in and around Kalpakkam, where the prototype fast reactor is under construction. It showed the disease affected 24 per cent women within a radius of 5 km from the plant. It reduced to 6 per cent within a 40 km radius and to 0.8 per cent in 400 km.
Of the 5,000 people working at the plant site in Sadras village, very few are from Tamil Nadu, said Suresh Kumar, a resident of Sadras whose brother used to work at the site. People in the area are afraid of exposure to radiation.
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| Nuclear health hazards are often suppressed. A 1993 UN report found occupational hazard in nuclear plants in India was over six times the world average | |
The reprocessing plant at the site segregates the spent fuel into plutonium and uranium, and radioactive waste is diluted for disposal in the sea. A retired nuclear scientist from Kalpakkam, requesting anonymity, said uranium and plutonium, which need to be stored in secure underground repositories, are kept in temporary surface facilities at the site. Health surveys conducted by physicist Surendra Gadekar between 1989 and 1991 at the Rawatbhata nuclear plant in Rajasthan showed high incidence of tumours, miscarriages, still births and congenital diseases.
dae denies radiation from nuclear plants is affecting people's health.
Several accidents have also occurred at nuclear plants. Six employees of the Kalpakkam reprocessing plant were exposed to high radiation due to a leak in a safety valve in 2003. This could have led to a major accident. In 1993, failure of steam turbine blades caused a fire at the Narora plant in Uttar Pradesh. It could have partially melted the reactor core where fission takes place.
India's nuclear power producer npcil said there is no reason to worry about safety. "In India we have had 305 reactor-years of safe operation," said S Thakur, npcil's executive director. Reactor-years are the cumulative years for which all reactors in a country have functioned. A UN report in 1993, found occupational hazard in nuclear plants in India was six to eight times the world average. A public interest petition demanding the disclosure of an Atomic Energy Regulatory Board's report on the safety of nuclear power plants was rejected by the Supreme Court in 2004 under government pressure.
Given the risks, how desperately should India pursue nuclear energy? The Planning Commission's energy policy report says India will have to increase its electricity generation more than four times by 2030 to sustain the eight per cent economic growth. The report also observed India's coal reserves will not last more than 45 years. So it is impossible to leave out any energy source. "Just one per cent (of the energy mix) decides between illuminating two million houses and plunging them into darkness," said V S Arunachalam, chairman of the Centre for Study of Science, Technology and Policy (cstep) in Bengaluru.
Wind, hydel and biomass cannot contribute more than a fourth of India's future energy need, estimates a report by cstep. Coal, nuclear and solar energy will have to meet the rest of the demand.
The world's uranium reserves are likely to last 80 years, according to the industry body, World Nuclear Association. Solar energy is viable subject to scaling down the price (Rs 20 per unit) and evolving the technology.
Additional reporting by Niranjana Ramesh in Chennai
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