Distribution: weekly

Context

For more than a decade, no major meeting between an Indian Prime Minister and a U.S. President has passed without a ritual reference to India’s promise made in 2008 to purchase American nuclear reactors.

Issues in the nuclear deal

• Construction of reactors: During president Trumps visit techno-commercial offer for the construction of six nuclear reactors in India at the earliest date was considered.
• More expensive: Indeed, it has been clear for years that electricity from American reactors would be more expensive than competing sources of energy.
• Prone to disasters: Moreover, nuclear reactors can undergo serious accidents, as shown by the 2011 Fukushima disaster.
• No liability for accidents: Westinghouse has insisted on a prior assurance that India would not hold it responsible for the consequences of a nuclear disaster.
  • Which is effectively an admission that it is unable to guarantee the safety of its reactors.

Who will be benefited from the deal?

• The two beneficiaries: The main beneficiaries from India’s import of reactors would be Westinghouse and India’s atomic energy establishment that is struggling to retain its relevance given the rapid growth of renewables.
• Political implications: Mr Trump has reasons to press for the sale too. His re-election campaign for the U.S. presidential election in November.
  • The election centrally involves the revival of U.S. manufacturing and he has been lobbied by several nuclear reactor vendors, including Westinghouse.
  • Finally, he also has a conflict-of-interest.

Comparisons with the renewables

• The total cost of the reactors: The six reactors being offered to India by Westinghouse would cost almost ₹6 lakh crore.
  • If India purchases these reactors, the economic burden will fall upon consumers and taxpayers.
• Per unit price: In 2013, it was estimated that even after reducing these prices by 30%, to account for lower construction costs in India, the first year tariff for electricity would be about ₹25 per unit.
• Comparison with solar energy: Recent solar energy bids in India are around ₹3 per unit.
  • Lazard, the Wall Street firm, estimates that wind and solar energy costs have declined by around 70% to 90% in just the last 10 years and may decline further in the future.

Safety concern with nuclear energy

• Long term cost in case of disasters: Nuclear power can also impose long-term costs.
  • Chernobyl accident: Large areas continue to be contaminated with radioactive materials from the 1986 Chernobyl accident and thousands of square kilometres remain closed off for human inhabitation.
  • Fukushima accident: Nearly a decade after the 2011 disaster, the Fukushima prefecture retains radioactive hotspots.
  • The cost of clean-up: the cost of clean-up has been variously estimated to range from $200-billion to over $600-billion.
• No liability towards company: The Fukushima accident was partly caused by weaknesses in the General Electric company’s Mark I nuclear reactor design.
• But that company paid nothing towards clean-up costs, or as compensation to the victims, due to an indemnity clause in Japanese law.
• What are the provisions in Indian laws: Westinghouse wants a similar arrangement with India. Although the Indian liability law is heavily skewed towards manufacturers, it still does not completely indemnify them.
  • So nuclear vendors have tried to chip away at the law. Instead of resisting foreign suppliers, the Indian government has tacitly supported this process.

India’s experience with nuclear energy

• Starting with the Tarapur 1 and 2 reactors, in Maharashtra, India’s experiences with imported reactors have been poor.
• The Kudankulam 1 and 2 reactors, in Tamil Nadu, the only ones to have been imported and commissioned in the last decade, have been repeatedly shut down.
• Producing less than capacity: In 2018-19, these reactors produced just 32% and 38%, respectively, of the electricity they were designed to produce.
• These difficulties are illustrative of the dismal history of India’s nuclear establishment.
• Electricity generation stagnant at 3%: In spite of its tall claims, the fraction of electricity generated by nuclear power in India has remained stagnant at about 3% for decades.

Conclusion

The above factors indicate that the government should take the rational decision on the adoption of nuclear energy given its cost and the risk involved and the better alternative available in the form of solar and other renewable energies.