India’s currently capacity for nuclear energy production is about 4,500 megawatts, largely via pressurized heavy water reactors located in the west, north and south. According to a January 2009 speech by Dr. SK Jain, Managing Director of India’s nuclear utility, atomic energy will go from 3% of current total energy output to 9% by about 2032. India is committed to expanding nuclear production to 30,000 megawatts by about 2025 in order to fuel its growing economy and its rising middle class.
India’s underground test detonation of a nuclear device in May 1974 brought a complete and sudden stop to the overseas technology and fuel that had developed its first operating three reactors (TAPS 1&2, RAPS 1). At a time when India was not generally known for engineering prowess, its nuclear engineers extended the heavy water technology to design 200 MW, 540 MW and now 700 MW Indian pressurized heavy water reactors. This remarkable feat is generally underappreciated in the rest of the world. Indian engineers also designed and executed the en-masse replacement of all coolant channels at several of the reactors. Over the decades, local companies developed the skills to manufacture and fabricate the heavy, precise steel vessels. And India’s government agencies began producing the heavy water required for domestic use.
Today, most of India’s stations are in remote areas and most reactors are in the range of 200 MW. RAPS remains the biggest site with six reactors today and more to come. Further heavy water designs will be built at 700 MW capacity; India plans about eight of these bigger reactors for now. The first may come up in Rajasthan by 2016 or so.
NPCIL engineers manage and oversee the construction of such plants. Indian private sector and public sector companies participate in civil construction as well as supply of systems and components. The massive growth in Indian PHWR and the aging current fleet are potential opportunities for companies from overseas and should not be overshadowed by the plans for light water plants from the likes of Areva, Westinghouse and Atomstroyexport.
Russia came to an agreement with India to build two 1000 MW VVER units at Kudankulam on the southern tip of the Tamil Nadu coast, more or less on a turnkey basis. These will utilize light water and the enriched uranium is provided by Russia and are expected to be live on the grid by 2011. An expansion of up to six units starting in 2011 is planned at Kudankulam in West Bengal, in eastern India. At a nearby site in Haripur, construction of two VVERs is likely to start in 2012-13. These units will probably be broken up into ‘packages’ by NPCIL engineers in order to be able obtain more competitive bids and better value for money.
Between 2005 and 2008, India and the United States completed a series of complex and controversial top-level negotiations between President Bush and Prime Minister Dr. Manmohan Singh and their advisors. In September 2008, the negotiations bore fruit when the US legislature approved the 123 agreement that will eventually permit any member of the 38-nation Nuclear Suppliers Group to sell fuel and technology to India.
The complexity of the heavy water reactor design and the renewed availability of enriched uranium fuel make the idea of light water reactors quite attractive to India. Given the history of global sanctions, India also feels some degree of comfort in diversifying its supply and technology base.
While NPCIL has announced plans to set up joint ventures to operate nuclear power plants, I don’t believe that India is likely to let foreign companies or even the Indian private sector have access to operate the nuclear island any time soon. Its early JV partners are companies such as the National Thermal Power Corporation (NTPC, a federal utility) and Bharat Heavy Electrical Ltd. (BHEL, a public sector undertaking that produces boilers, turbines and generators).
I understand that the partnership with BHEL and NTPC is primarily financial. NTPC may eventually operate the conventional island of the nuclear power plants but is unlikely to have access to the nuclear reactors in the future. NPCIL had 2009 sales of $750 million and its bonds are top-rated on the Indian market. It plans to fund the expansion with an equal combination of debt, retained earnings and the issuance of new equity. Foreign financial institutions such as the US Export Import Bank will also help fund equipment sales by foreign entities via loans and loan guarantees.
Author Info:
Gunjan Bagla is managing director of Amritt, Inc. in Cerritos, California. He is author of 2008’s Doing Business in 21st Century India. Amritt is a member of the US-India Business Council and participated in a recent nuclear energy trade mission to India.
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