India’s zeal for reactor imports needs to be tempered

Brahma Chellaney

The American-inspired multilateral export controls, including on high-technology flow, that have blocked India from importing even reactors and fuel for power generation, need to go in full — not just partially and conditionally as under the proposed Indo-U.S. nuclear deal. India is keen to boost nuclear power generation by buying reactors from all the three principal countries that can make such exports — the U.S., France and Russia.

In consecutive months this year it has finalised agreements to buy reactors from France and Russia, subject to a rule change by the Nuclear Suppliers Group (NSG), a U.S.-led cartel. Its hopes of opening up international civil nuclear trade, however, have been dealt a blow by uranium-rich Australia’s U-turn on yellowcake exports to India — an ill-founded decision by its new Prime Minister that is to stand even if the NSG changes its rule.

India needs a mix of energy sources as a commercial hedge against unforeseen risks, and nuclear power certainly deserves a place in a diversified energy portfolio. But India needs to temper its new-found enthusiasm for nuclear power, which currently supplies barely 2.5 per cent of its electricity.

First, generating power from imported reactors dependent on imported enriched-uranium fuel makes little economic or strategic sense. Had the proposed import of such light water reactors (LWRs) — the only type on offer — been part of India’s planned transition to autonomous capability, akin to China’s, the purchase of that model could have been justified. But India has no intention to design and build LWRs locally.

Second, just as lucrative arms export contracts oil the military-industrial complex of any major international power, reactor exports are integral to the French and Russian nuclear power business and to America’s efforts to revive its moribund industry, which has not received a single domestic reactor order since the 1970s. The political salesmanship on reactor exports thus is no less intense than on arms sales, with the sales pitch on both centred on the word “security,” although energy or national security does not mesh with import dependency.

Today, India is under pressure to replicate in the energy sector the very mistake it has made on armaments. One of the world’s top arms buyers, India now annually imports weapons worth between $4 billion and $6 billion, many of questionable value, even as its own armament production base remains weak and underdeveloped. Despite the rising arms imports bill, the Indian military is becoming less capable of winning a decisive war against an aggressor-state. Nuclear power, which was unappealing until imports were not possible, with the domestic industry actually starved of necessary funds for expansion through much of the 1990s, is now touted as an answer to India’s energy needs. But why should India compound its mistake on armaments by importing high-priced reactors when it can more profitably invest in the development of its own energy resources?

Third, the share of nuclear power in worldwide electricity supply has been stagnant at 16 per cent for the past 22 years. A 2003 MIT study put it thus: “Today, nuclear power is not an economically competitive choice.” The industry is still dependent on generous state subsidies for survival. To be sure, every energy source relies on some state subsidy. But nuclear power involves the most significant external costs, which are usually passed on to the taxpayers, including on accident liability cover, anti-terrorist safeguards, radioactive waste storage, retirement of old reactors, research and development, and international safeguards. To know the true cost of nuclear-generated electricity, the eclectic state subsidies need to be factored in.
Such is the reality that even External Affairs Minister Pranab Mukherjee was compelled to admit in the Rajya Sabha last December: “Yes, it is proved, everybody admits that nuclear energy… is definitely costly.” This is borne out by India’s indigenous power reactors: escalating construction costs have resulted in all the newer nuclear plants pricing their electricity at between 270 and 285 paise a kilowatt hour (kWh). Compare those tariffs with Reliance Energy’s coal-fired Sason plant project, which has contracted to sell power at 119 paise a kWh, or even with the poorly-run Dadri plant, which supplies electricity to Delhi at 225 paise a kWh, although coal has to be hauled for the plant over long distances. When India produces electricity from reactors it wishes to import, the already wide price differential will increase.
Mr. Mukherjee, however, tried to put an interesting gloss, claiming that nuclear power “technology is moving ahead... With the advancement of the technology… nuclear energy, if it appears to be too costly today, perhaps, it will not appear that costly tomorrow.”

In a rapidly changing world, technological advances are inevitable. But international studies have shown that nuclear power, although a 50-year-old mature technology, has demonstrated the slowest “rate of learning” among all energy sources, including newer technologies such as wind power and combined-cycle gas turbines.