The debate on the India-US nuclear deal has been seen largely in political terms. Proponents for and against have viewed the pros and cons through the prism of our country’s sovereignty. In the din of the nuclear standoff, what tends to get lost is India’s urgent requirement for additional power generation if we are to sustain our current GDP growth of 9.4 per cent.
In fact, of India’s total installed capacity of 135,006 MW, nuclear power accounts for only 4,120 MW — just 3.05 per cent. Taking into account capacity of 213,584 MW at the end of the Eleventh Plan period, our share of nuclear power will be only 3.51 per cent with the addition of 3,380 MW capacity.
Traditionally, India’s power requirement has been met through coal. We have a total of 221 billion metric tonnes(MT) of non-coking coal reserves, mostly concentrated in the eastern region. Last year, Indian coal companies supplied 360 million MT to the power sector. This scale of movement is testing the limit of logistics; we simply do not have the infrastructure in terms of either ports or roads or rail capacity — even though the government has been augmenting rail capacity for coal movement — to move larger quantities.
The Coal Ministry is allocating coal blocks and encouraging pithead generation but for many reasons, not least of them political, it is not possible to position all electricity generation at the mines. For one, concentrating power plants in one area of the country will result in lopsided economic development. Moreover, power plants need to be equitably spread out to enable efficient power carriage through the grid.
Clearly, it is essential, if our economy is to continue to grow, that all sources of power generation be taken into account. Of course, there is our hydro-electric potential of 150,799 MW. But this needs considerable effort and resources to develop. The gestation period is unacceptably long in many cases and this has been the primary reason for our less than scintillating record of hydro-power development.
The demand for imported coal is at its highest ever. Although we have large reserves of coal, Indian coal is high in ash, low in calorific value and would be better preserved at this stage. Starting in 1995, when coal imports first eased up, many power plants have opted for imported coal or a blend of imported/domestic coal. Of the five ultra mega power plants (UMPPs) being promoted by the government, three are dependent on imported coal.
But India is not the only country with a huge demand for imported coal. The result? Imported coal prices have surged by a whopping 40 per cent in the last year. Ocean freight too has gone up by 60 per cent. Some countries, such as China, with a large reserve of good quality coal, have imposed a moratorium on its export. China is, in fact, adding 1,000 MW a week in power generation over the next year.
The renewed interest in nuclear power plants in the US and Europe is due to their excellent safety track record. There are 60 new nuclear power plants — 30 in the US alone — under planning/implementation. France derives over 75 per cent of its electricity from nuclear power and earns an estimated three billion euros annually as the world’s largest net exporter of electricity. It claims a substantial level of energy independence. (India, on the other hand, which can ill afford expensive power generation, has the highest per unit cost anywhere in the world.) France also records among the lowest CO2 emissions per capita from electricity generation, since over 90 per cent of its electricity comes from either nuclear or hydro sources.
The assumption — largely erroneous — that nuclear power will result in exorbitant electricity costs is based on the undoubtedly high capital costs (many of which stem from meeting stringent safety requirements). On a plant to plant comparison, were thermal power plants put to the same rigorous environmental standards, their capital costs would also be correspondingly high.
The cost of nuclear electricity generation in India is competitive with thermal for plants located 1,500 km from pitheads. Moreover, there is tremendous scope for reducing the capital costs of nuclear power plants by shortening construction time, standardising designs, resorting to modern techniques of project management, etc. Developing plants with higher capacity would also translate into economies of scale, that would further bring down costs.
Finally, the annual tariffs for eight Nuclear Power Corporation of India Ltd-owned reactors is below Rs 2/KWH (kilo watt hour). Estimated tariffs for 2006-07 is Rs 2.19/KWH, which is cheaper than the levelised tariff of any of UMPPs based on imported coal or, for that matter, an old plant such as Dabhol and the prestigious HBJ-fuelled Kawas at Rs 7.30 per unit.
Finally, fossil fuel power plants depend on non-renewable natural resources. Their costs in contributing to global warming are incalculable. Rising atmospheric pollution standards are likely to raise the cost of electricity generated by thermal power plants even more.
For any country, energy security is absolutely vital to its economic development, empowerment of its people and the building of a knowledge society. The potential long-term costs of ignoring nuclear power are enormous and India can ill-afford them.
Rahul Bhandare is Chairman and Managing Director of Knowledge Infrastructure Systems, a private company that trades in imported coal.