Limits on foreign reactor technology may limit India's nuclear ambitions

Experts say that a new draft framework could dilute India's largest?nuclear?reform in decades, by adding additional approval requirements for foreign reactors. This would force companies to choose domestic technology and imports over the latter, and restrict the flow of new capital and expertise.

The draft framework is a follow-up to 'New Delhi's' new nuclear law passed last year. This opened up the country's tightly controlled nuclear sector to private companies, and sought to attract foreign technology.

India expects that it will need to invest nearly $210 billion to increase its nuclear power capability almost tenfold, to 100 gigawatts, over the next 20 years. This is a cornerstone in its effort to reduce its dependence on coal which supplies the majority of the country's electrical energy.

NPCIL is the only nuclear power plant in the country and the sole holder of the technology. It has already begun a 14 GW expansion program through 2032. Private capital and new reactor technologies are critical for meeting the 100 GW target set by the government.

The government has held discussions with Indian conglomerates such as Tata Power, Adani Power, and Reliance Industries as well as foreign companies like Russia's?Rosatom and France's EDF, and U.S. based GE Hitachi.

Sources in the industry, who asked to remain anonymous because the consultation process continues, stated that they are waiting for the final rulebook to be released before making any investment commitments.

No response was received to questions sent to Tata Power Adani Power Reliance Industries Rosatom EDF and GE Hitachi. The deadline for companies to give feedback to the government regarding the draft regulations is September 4.

According to the proposed framework for importing reactors, companies wishing to do so must first obtain operational and licensing certificates from the country of importation. They will also need separate design approvals from India's Atomic Energy Regulator before they can start construction.

Suhaan Mukherji, managing partner of PLR Chambers, said: "We're taking a step away from the promise made by the new nuclear act which can transform India into a global leader in nuclear renaissance. If the rules discriminate against indigenous technology and outside technology and only allow foreign technology to be considered when there is an operating plant." He is an advisor to both domestic and foreign companies evaluating the opportunities of India's nuclear expansion plan, including the implications that the draft rules have.

He said that the small modular reactor technology (SMR) will be "dead in water".

India has identified SMRs (small modular reactors) as a promising tech because of their smaller size, lower initial costs and potential to make nuclear projects more easily deployable. Most designs have only recently begun commercial deployment worldwide, which could limit their eligibility under India’s proposed rules.

The Department of Atomic Energy of the country did not answer any questions.

Senior government officials involved in the drafting of the framework said that it prioritizes safety and aligns with international nuclear regulation practices.

However, industry executives said that New Delhi could lose access to the latest technologies if it adopts a strategy suited for more mature nuclear markets.

The draft document may also take a long time to approve the processes.

Mukerji explained that, "earlier, when the entire sector was run by the state, the site approvals, the excavation approvals and the construction approvals were all done simultaneously while waiting for the final design approval."

He said that developers can submit an application but that it won't be processed until the design is approved.

He said, "This will hinder reaching the government's target."

Shri Venkatesh is a partner in the law firm SKV that advises Indian energy firms.

MISSING COMMERCIAL DATA

Industry executives said that the draft nuclear rules leave unresolved several investment-related issues, such as how tariffs are determined, what investors can expect, and the minimum technical and financial qualifications prospective operators must have. Four company executives and two officials who are not authorized to speak to media said that Indian and foreign companies have had at least 12 interactions with the federal department of atomic energy over the past eight months. They also sought clarification on?issues such as fuel tie-ups and fuel reprocessing requirements.

Two government officials stated that earlier draft rules circulated in government departments included more detailed provisions, such as qualification and tariff fixing with a?review provision every five years.

Many of these specifics are not included in the version made available for public consultation, they said, raising concern that investment decisions may be delayed.

Venkatesh explained that "the numbers appearing in the drafts govern how a licensee behaves once they are inside the system."

What is harder to locate are the numbers that determine if a project even deserves financing. Some of these numbers are left for future notifications."

After the public consultation, nuclear rules and regulations are expected to be finalised within three months.

(source: Reuters)