By Aashna Mehra
Severe global shortages of coal and natural gas and rising commodity prices in the wake of the COVID-19 pandemic and the Russia-Ukraine war continue to send shockwaves through the global economy, with winter weather preparedness in question across many parts of the world. India, as a net energy importer, has not been immune to these concerns. The country generates over 75% of its electricity from coal. As recently as late June 2022, several media reports cite a “severe and protracted” power crisis in the country due to surging coal prices, which have led to dwindling coal import volumes and power plant stockpiles, threatening power shortages and rolling blackouts.
This problem is not catching the Indian authorities unawares. PM Modi’s government, and several Indian governments before them, has recognized the critical economic and strategic importance of ensuring India’s energy independence. The well-understood need to ensure secure fuel supplies has also been accompanied by an acknowledgment of the social and environmental costs of coal dependence over the long-term. Issues of deteriorating air quality in many parts of the country and the need for India, as one of the largest growing economies in the world, to lead from the front on the issue of climate change have thus brought decarbonization and cleaner forms of energy into sharp focus. Since 2015-16, 65.6 GW of solar and wind capacity has been added to the grid, with 90% of the country’s 54 GW of installed solar capacity having come online since 2015-16. At COP26, PM Modi committed that 50% of India’s energy by 2030 will come from renewable resources. While this dramatic growth in renewables is laudable, renewable generation is intermittent, particularly in the absence of long-duration high energy density battery storage. This underscores the importance of low- or no-carbon base load power. While natural gas has served as a transition fuel for various industrialized nations, its benefits in terms of reducing India’s import dependence are de minimis. The transportation of natural gas to the country through pipelines and ports is also vulnerable to disruption by neighboring countries like Pakistan and China in the event of a conflict. Given India’s ambitious growth plans and accompanying energy demand as well as its plentiful thorium-232 reserves, nuclear power can serve as the carbon-free firm capacity resource to propel India’s energy economy.
Nuclear energy has long been accepted by successive Indian governments as a critical piece in the country’s energy mix. India began to work on harnessing the power of nuclear energy at a commercial scale in the 1960s, when it set out to build a three-stage closed fuel cycle process, conceived by Dr Homi Bhabha. In this three-stage process, nuclear waste from one stage could be reprocessed and used as feedstock for the next stage, with the ultimate goal of utilizing the country’s vast thorium-232 reserves to produce uranium domestically. For the first stage of the process, India indigenously designed and developed uranium-fueled Pressurized Heavy Water Reactors (PHWRs), which generate electricity and produce plutonium-239 as a byproduct, which could then be used alongside uranium in Fast Breeder Reactors (FBRs) for the second stage of the process. The FBRs aimed to produce energy and “breed” even more plutonium-239, which would then be used with thorium-232 to produce energy and uranium-233 using Thermal Breeder Reactors (TBRs), hence completing the full cycle.
The 2008 India-U.S. civilian nuclear deal also provided fillip to India’s domestic nuclear program. As a result of the deal and subsequent relaxation of constraints by the Nuclear Suppliers Group (NSG), Indian nuclear reactors, which were forced to operate below capacity, were finally able to procure enough uranium fuel to run near full capacity and move closer to realization of the goals of the three-stage process. These successes, however, have also been accompanied by significant setbacks and delays over the past decade as a result of both intrinsic and extrinsic problems. The first pressurized FBR (500 MW in Kalpakkam, Tamil Nadu), which underpins the second stage of the process, has suffered both massive time and cost overruns due to technical issues. Despite momentum coming out of the 2008 India-U.S. nuclear deal and announcements of India’s intention to work with NSG members like the U.K., France and Japan, the rapidly falling levelized cost of energy from renewables, especially solar, and issues surrounding land acquisition and liability management decelerated India’s civilian nuclear efforts. An Indian law passed in 2010 sought to hold a supplier of nuclear technology liable for any accidents. This issue was compounded by the Fukushima Daiichi disaster in 2011 that brought to the fore issues of the safety and security of nuclear power plants. That unfortunate event led to a worldwide withdrawal in the deployment of new nuclear power plants and was accompanied by the bankruptcies of global nuclear supermajors like Westinghouse and Areva.
As the world adjusts to a paradigm shift and emerging realities of energy dependence on Russia given its actions in Ukraine, India and its civilian nuclear program are on the cusp of a notable opportunity. According to the International Energy Agency, Russia, through state-owned Rosatom, has been one of the most significant players in the supply of uranium across the globe. As a result of its historical closeness with Kazakhstan, which produces over 40% of the world’s uranium, Russia provided 38% of uranium processing and over 45% of uranium enrichment capacity in 2020. Russia has also been a major exporter of new nuclear reactors and 17 of the 31 reactors that have commenced construction since 2017 across the world have been of Russian design. This can be contrasted with the U.S. that has seen its position in global nuclear trade dwindle. This has largely been due to restrictive and complex export control rules, which are administered by four separate agencies, and the lack of state subsidies and attractive financing for suppliers looking to export nuclear technology abroad.
New Delhi and Moscow have both been beneficiaries of Indian appetite for and Russian leadership in civilian nuclear deployment. Through the 1980s and 1990s, when India was relegated to global pariah status for its nuclear ambitions, the former Soviet Union provided much-needed fuel to ensure continued progress of India’s nuclear program. In recent times, despite India’s liability regime, Russia has found creative ways to continue working with the country to share nuclear technology, expressing a desire to cooperate on six Russian-designed nuclear reactors in India and boost cooperation as recently as October 2018. While the India-U.S. nuclear deal was a harbinger of nuclear, and broader, cooperation between the two countries, U.S. nuclear suppliers and companies have not had similar success working with Indian authorities to resolve thorny issues. U.S.’s demand of India to track nuclear materials supplied, the ability for Indian nuclear operators to sue suppliers, and the availability of “tort remedies” to victims of a potential accident have continued to serve as an impasse for over a decade.
As the U.S. seeks to renew its leadership in the global civilian nuclear energy market, collaborate with growing economies like India on the issue of decarbonization and climate change, and isolate Russia for its aggression in Ukraine, it is uniquely positioned to enable India to become a technology exporter and energy-independent nation based on nuclear power. India has long held ambitions to export its domestically developed PHWRs, which use natural uranium and obviate the need for fuel enrichment. These efforts, however, have been stifled due to NSG regulations and China’s repeated objection to India’s entry into…