India Removes Major Obstacle to Growth of its Nuclear Energy Industry
Clears path for nuclear energy to generate 25% of India’s electricity by 2050 from 3% today
Last week, the Indian government made a change in policy that is likely to be transformational to the nuclear industry and “should open the flood-gates for more new reactor investment.” said David Sadowski, Uranium Analyst at Raymond James.
This new policy clears the way for India to deliver on its plan to increase electricity generation from nuclear by over 300% from 7 gigawatts (GW) today to 31 GW in 2025. And India’s nuclear energy growth accelerates from there to a planned 63 GW of power to be generated by 2032 and 270 GW by 2050, at which time nuclear would provide 25% of the country’s electricity needs (Figure 1). India’s nuclear energy growth plan rivals that of China; India has 21 nuclear reactors operating and 6 under construction – and negotiations are reported to be underway for the construction of at least 12 more – on the way to achieving these ambitious targets.
Ratification of the CSC
The Indian government ratified the Convention on Supplementary Compensation for Nuclear Damage (CSC) with the International Atomic Energy Agency on February 4th, 2016. Previously, Indian law held the suppliers of nuclear plants potentially liable in the event of an accident, in contrast to the international norm in which the liability falls to the power plant operator. Power plant operators are able to obtain insurance for such an event, whereas similar insurance is typically not available to equipment suppliers for a nuclear plant that they don’t operate. Hence, the insurance issue caused by the prior policy has been a major stumbling block to nuclear energy development in India. The ratification allows India to accelerate its rate of reactor construction. US Energy Secretary Moniz said, “I welcome India to the CSC and look forward to their deployment of civil nuclear energy technologies to help provide reliable, low-cost power to millions of Indians. These efforts will help spur a low-carbon economy to combat climate change”.
Get our daily investorintel update
Electricity in India
Energy is a major issue in India – one third of the population has no access to electricity at all – and India’s population is growing fast – it’s already almost the size of China’s. About one third of India’s population lives in cities – a number that grows by about one million people per month. According to the World Bank, “India will soon have the largest and youngest work force the world has ever seen” (Figure 2). Twenty-five of the world’s fastest-growing cities are in India. India’s GDP has been growing at an impressive average of 7.4% per year for the last decade.
Per capita electricity demand is expected to double by 2020 as a consequence of urbanization and the thriving economy. But electricity generation is already contributing to unacceptable levels of pollution – India derived 61% of its electricity from coal in 2015. The Economist points out that India’s large cities have worse pollution problems than the larger Chinese cities (Figure 3). Delhi, for example, has twice as much “respirable suspended particulate matter” – fine-grained particles that settle in the lungs – as Beijing. The Economist suggests that air pollution is responsible for between 25 thousand and 50 thousand deaths per year out of a population of 25 million in Delhi alone.
India’s Nuclear Energy Plans
Clearly, India desperately needs clean electricity on a massive scale – and it is turning to nuclear energy as a solution. Its immediate plan is to build about 60 reactors by 2030; Russia is building 6 reactors in India and is reported by Reuters to be in discussions to construct another 6. And a deal is expected to be announced within the next few months for Westinghouse to build an additional 6 reactors at sites already selected. Discussions are also reported to be underway with GE and Areva for the construction of other reactors. To reach its target of 270GW of electricity from nuclear by 2050, India would require about 250 reactors – a target comparable only to China’s target. To put these plans in perspective, the USA – the world’s current largest nuclear electricity generator – has 99 operable reactors that have the capacity to generate 99GW of electricity.
Sources: Migration Policy Institute, Population Pyramids, Raymond James Ltd., Reuters, Statistica, World Bank & World Nuclear News.
- February 5, 2016 – India joins nuclear liability convention – World Nuclear News
- February 4, 2016 – India ratifies nuclear liability convention, hopes to win foreign investment – Reuters
- January 16, 2016 – Particular about particulates – The Economist
- World Population Pyramids
- Rate of Urbanization in India – Statistica
- Internal Labour Migration in India Raises Integration Challenges for Migrants – Migration Policy Institute
- India – An Overview – The World Bank
Richard Spencer is president and CEO of U3O8 Corp., (UWE.TO, OTC:UWEFF and SSE:UWE). U3O8 Corp. (www.u3o8corp.com) is a Toronto-based exploration company with a portfolio of ... <Read more about Richard Spencer>