Why India needs more power for AI, chips and datacentres

Why in the News

The Department of Atomic Energy released draft rules covering private participation, captive generation, licensing, safety oversight and nuclear liability under the SHANTI Act. The rules follow a stated target of 100 GWe of nuclear capacity by 2047 against an operating base of 8.7 GWe. The tension is between opening a sector historically closed to private capital and retaining state control over fissile material, safety and liability.

What is the SHANTI Act?

1. About: The SHANTI Act is the legislation passed last year that opens nuclear power generation to private participation, ending the state monopoly on reactor operation.
2. What it changes: It creates a licensing route for private operators and permits captive nuclear generation for industrial users.
3. What it retains: Fuel cycle control, safety regulation and the liability framework stay with the state.
4. Status: Draft rules under the Act have been released, so the operating framework is now in the consultation stage rather than in force.

What is a Small Modular Reactor?

1. About: A Small Modular Reactor (SMR) is a reactor of up to about 300 MWe built from factory fabricated modules rather than constructed entirely on site.
2. Why it matters: Factory fabrication shortens construction time and lowers the upfront capital block that makes large reactors hard to finance.

Where does India’s nuclear capacity actually stand?

1. Operating fleet: 25 reactors in operation with a combined capacity of 8.7 GWe.
2. Under construction: 10 reactors adding about 8 GWe.
3. Pre project stage: 10 further reactors accounting for about 66 GWe, which is where most of the 100 GWe target sits.
4. Commissioning plan: Five new reactors are to be commissioned this decade.
5. Backbone technology: Pressurised Heavy Water Reactors remain the mainstay of the operating fleet.

What is the indigenous small reactor programme?

1. Bharat Small Modular Reactor: A 200 MWe design (BSMR-200) intended for grid and captive industrial supply.
2. Compact variant: A 55 MWe small modular reactor for smaller loads and remote siting.
3. High temperature design: A 5 MWt high temperature gas cooled reactor aimed at hydrogen production through a thermochemical process.
4. Deployment target: At least five indigenous small modular reactors operational by 2033.
5. Mission funding: The Nuclear Energy Mission carries an outlay of Rs 20,000 crore.
6. Site reuse: Retiring thermal plant sites are being studied for repurposing, since they already carry grid connection and cooling water access.

Why is demand growth driving the target now?

1. Datacentre load: Artificial intelligence and datacentre expansion require firm, round the clock power that intermittent renewables cannot supply alone.
2. Capacity addition: Operational datacentre stock stands at 1.8 GW of information technology load, with about 500 MW projected to be added in 2026.
3. Industrial decarbonisation: Semiconductor fabrication and green hydrogen electrolysis both need continuous low carbon power.
4. Grid character: Nuclear supplies baseload, which is the specific gap left by a renewables heavy addition profile.

Where does foreign collaboration fit?

1. Russia: The existing large light water reactor partnership at Kudankulam is the deepest supplier relationship.
2. United States: Collaboration is expected to centre on small modular designs rather than large units.
3. France: Large reactor negotiations have run for over a decade without financial closure.
4. Design economics: Foreign collaboration is shifting toward small modular reactors because large light water reactors carry costs India has not been able to close on.

Challenges to the 100 GWe nuclear target

1. Liability deterrence: Supplier liability provisions have kept foreign vendors from signing commercial contracts. e.g. the Jaitapur project’s unresolved negotiation with the French supplier since 2010.
2. Construction schedule slippage: Indian reactors have historically overrun their commissioning schedules by years. e.g. the Kudankulam units commissioned well past their original dates.
3. Land acquisition and local resistance: Reactor siting has triggered sustained local opposition. e.g. the prolonged protests at Kudankulam in Tamil Nadu.
4. Fuel supply: Domestic uranium output is insufficient, leaving the fleet dependent on imported fuel under safeguards. e.g. supply agreements with Kazakhstan, Canada and Russia.
5. Regulatory independence: The Atomic Energy Regulatory Board is not a statutory body independent of the Department of Atomic Energy. e.g. the Comptroller and Auditor General’s 2012 audit flagging this exact conflict.
6. Cooling water availability: Reactor cooling depends on assured water, which climate stress is making less reliable. e.g. Hungary running the Paks plant at a quarter of capacity in 2026 because Danube levels fell.

Conclusion

The draft rules are the point at which the SHANTI Act stops being an enabling statute and becomes an operating framework, which is what private capital has been waiting for. The 100 GWe target is arithmetically dominated by reactors still at the pre project stage, so the binding question is licensing throughput rather than intent. The next milestone is the finalisation of the draft rules and the first private licence issued under them.

Nuclear Energy in India

1. Three stage programme: India’s programme runs from pressurised heavy water reactors using natural uranium, to fast breeder reactors using plutonium, to thorium based reactors exploiting India’s large thorium reserves.
2. Thorium position: India holds among the world’s largest monazite bearing thorium reserves, concentrated in the beach sands of Kerala, Tamil Nadu and Odisha.
3. Share of generation: Nuclear supplies about 3 per cent of India’s electricity generation.
4. Institutional structure: The Department of Atomic Energy reports directly to the Prime Minister, and the Nuclear Power Corporation of India Limited operates the commercial fleet.
5. Safeguards status: India operates a separated civil and military nuclear programme, with civil facilities placed under International Atomic Energy Agency safeguards after the 2008 waiver.

Laws and Rules Governing Nuclear Energy

1. Atomic Energy Act, 1962: Vests control of atomic minerals, fissile material and reactor operation in the central government. Reserved commercial nuclear generation to public sector entities until the SHANTI Act.
2. Civil Liability for Nuclear Damage Act, 2010: Channels liability to the operator and creates a right of recourse against the supplier. Section 17(b) is the specific provision that foreign suppliers have objected to.
3. Atomic Energy (Radiation Protection) Rules, 2004: Govern radiation safety, licensing of radiation installations and occupational exposure limits.
4. SHANTI Act: Opens generation to private participation and provides for captive nuclear generation. Draft rules covering licensing, captive generation, safety oversight and liability were released on 14 August 2026.

Government Initiatives

1. Nuclear Energy Mission: Carries an outlay of Rs 20,000 crore for research and deployment of small modular reactors.
2. Bharat Small Modular Reactor programme: Develops a 200 MWe indigenous design for grid and captive industrial supply.
3. Nuclear Power Corporation of India fleet mode procurement: Approves multiple pressurised heavy water reactors together to compress procurement and construction timelines.
4. India based Neutrino Observatory and allied research: Supports the domestic research base underpinning the three stage programme.

Way Forward

1. Finalise the liability rules: Settle supplier recourse in the notified rules so vendor contracts can reach financial closure.
2. Make the regulator statutory: Give the Atomic Energy Regulatory Board statutory independence from the Department of Atomic Energy.
3. Standardise the small reactor design: Freeze one design for repeat build so factory fabrication delivers its cost advantage.
4. Use retiring thermal sites: Convert closed thermal plant land, which already has grid and water access, into small reactor sites.
5. Publish a licensing timeline: Give applicants a defined statutory clock for licence decisions, since 66 GWe of the target sits in reactors not yet approved.

Matching Previous Year Question

“[2018, GS3, 15 marks] With growing energy needs should India keep on expanding its nuclear energy programme? Discuss the facts and fears associated with nuclear energy.”