Going Smart

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India's Quest for Energy-- Nuclear & Other Greener Options

 Ritwik Mukherjee
(As Presented at the 8th Economic Forum, Sopot, Poland, organized by the Economic Forum Programme Council of Foundation Institute of Eastern Studies)

Distinguished Guests. Ladies & gentlemen. Let me take this opportunity in thanking the Economic Forum Programme Council of Foundation Institute of Eastern Studies for giving me this opportunity of presenting India’s case and perspectives on bridging the demand-supply gap in energy sector, exploring nuclear and other greener options. India, right next to China, has been among the world's fastest growing economies for the past two decades. The country continues to lead not only world economic growth but also energy demand growth. Increasing pressure of population and increasing use of energy in different sectors of the economy is an area of concern. What are India’s ways to meet growing energy demand? The presentation aims to describe country’s nuclear energy sector and prospects for development of other greener options.

While putting forward India’s case, I will base my arguments on the basis of my regular interactions with country’s economic think-tank, policy makers, energy sector topbrass, scientists, technocrats, who I keep meeting by virtue of my profession.

I rise to speak before such an august gathering at a time when India’s politically sensitive Kudankulam nuclear power project has been commissioned now after much delay and has already started generating close to 400 MW. Moves are also afoot and in fact in full swing to connect it with the Grid. India's atomic power plant operator, NPCIL, had been building two 1,000 MW reactors with Russian help at Kudankulam since 2001. Villagers under the People's Movement Against Nuclear Energy banner have been opposing the project for the past two years, fearing for their safety, especially since the nuclear disaster at Fukushima in Japan in March 2011.  Actually the Fukushima nuclear accident of March 2011 did open a Pandora’s Box and questions are being raised about the safety and necessity of nuke power in many parts of the world.

Indian authorities and scientific community however reaffirm that in India there is no risk to set up nuclear power station. According to them such incident will not take place in India simply because there is a system called "thermo syphoon" which is used to reduce the generation the excessive heat. This is completely autonomous, modernised and safe system. Although it depends on the Atomic Energy Regulatory Board (AERB) to examine the test results and decide whether this is a safe reactor, scientists have no doubt whatsoever that the reactor is a safe reactor and there is no question about it. It is designed with safety features. Besides, scientists say that atomic energy generates low grade cosmic radiation,  which is just a 1400 parts of cosmic ray pollution.

This has to be seen in the light of the fact that there are many who think that in India atomic energy is the one of the best options to attain energy security. There are people who think nuclear power is the only way out of the situation. It can make India self-sufficient in energy. Otherwise, even if India buys all the oil in the world, it would not be sufficient for its energy needs.

Significantly, even the Indian Prime Minister Dr Manmohan Singh has recently said that in order to meet the rising aspirations of our people, the supply of affordable clean energy will be one of our foremost national challenges. And nuclear energy will remain an essential and increasingly important element of our energy mix.  India actually has a vision of becoming a world leader in nuclear technology due to its expertise in fast reactors and thorium fuel cycle, he said. Those who were directly involved in building this plant say that Kudankulam is one of the safest nuclear power facilities in the world. It is so safe that it could resist even the strongest of tornadoes or even direct impact by an aircraft. India therefore has lined up bold plans for its nuclear sector – 470GW by 2050, more than the entire world can produce now.

There were not too many options. India’s power demand is growing increasingly by the day. India's dependence on imported energy resources and the inconsistent reform of the energy sector are challenges to satisfying rising demand. Coal provides 68 per cent of the electricity at present, but reserves are limited. Gas provides 12 per cent, hydro 12 per cent. The per capita electricity consumption figure is expected to double by 2020, with 6.3 per cent annual growth, and reach 5000-6000 kWh by 2050, requiring about 8000 TWh/yr then. There is an acute demand for more and more reliable power supplies. One third of the population is not connected to any grid.

Atomic Energy Commission, on its parts, envisages some 500 GWe nuclear on line by 2060, and has since speculated that the amount might be higher still at 600-700 GWe by 2050, providing half of all electricity. There is another projection which suggests that country’s nuclear share may rise to 9 per cent by 2037. The final figure in the long run would however depend on political will and determination to execute plans. At present, India needs overseas sources of uranium to power its reactors. In the long term, however, it will have to free itself from foreign sources by developing what it needs to complete the full nuclear-reprocessing cycle.

Scientific community also feels that the rate of global warming is increasing due to use traditional sources of energy and so according to him atomic energy is much safer for the world. In country like India, where low grade coal is used to generate thermal power, the expense in power generation cost becomes very high. So cost of generating atomic energy will be lower than thermal power.

There is no doubt that India will have to put increasing emphasis on nuclear energy, clean coal and renewable including solar and small hydro projects in order to meet the increasing electricity demand over the next decade. Just the other day, I was going through a recent report by KPMG Global Advisory Practice—titled: “Think BRIC” which says, “In order to supply the extra electricity, India’s total generating capacity should jump by 90 GW, to 241GW, with an increased emphasis on nuclear, clean coal and renewable, including solar and small-hydro.”

I was speaking to one of the executive directors  (Manish Agarwal) of this Big 4 firm who told me that with per capita GDP rising by about 6- 8 per cent per year, the growth in energy demand is enormous; in particular regarding electricity. While private sector investment in generation is increasing, India could face challenges until 2020 to comfortably meet its demand.

“A rural electrification program in the 1980s brought electricity to 200,000 villages for the first time. Generation capacity hit 150GW in 2006, a 40 per cent increase on the 2000 figure, after reforms in 2003 initiated a much needed restructuring of the power sector. However one respondent of the KPMG survey survey estimated that at least 500 million Indians still have no access to electricity.

The KPMG survey said that as compared to other BRIC countries, India had the second highest growth rate between 2000 and 2008 with an electricity consumption of 5.7 per cent. Despite this the country has the lowest electricity consumption per capita out of the BRIC countries. India’s electricity consumption per capita is expected to be roughly 841 kWh in 2020, representing only about one quarter of the global average.

According to the study, the country’s peak power capacity deficit is moving up. In addition to the generation deficit, this deficit is also contributed by the inefficiencies in the transmission and distribution systems and electricity theft. To combat this, some respondents expressed confidence in government assurances on formation of an independent regulatory system which will support growth in private investment, in public-private partnerships. They also point to the private investors, who have already made a start in building independent power plants, with the share of privately generated electricity currently at around 13 per cent of the total and rising. 

Coal, which already provides almost 70 percent of India’s power, will remain the dominant primary fuel, holding out commercial opportunities to those producers who are global leaders in high efficiency, clean-burn plant. But with India needing to diversify production, openings will exist for nuclear, gas and small hydro schemes. Also the need to extend basic electricity to vast rural population means that there are massive opportunities in terms of wind, biomass and, if we can get the prices right, especially solar energy.

KPMG and other similar consulting and research firms feel that India is an attractive destination for foreign capital investment since India has an advantage for future investment in production and manufacturing facilities. Government and private utilities are endeavoring to set up an infrastructure framework to facilitate investments in the country.

While government finances will find it impossible to manage alone, private finance and skills are largely available if investors feel the regulatory and legal framework is made to work for a fair return.

Having said all these, one must also keep in mind that India’s nuke journey is not expected to be a smooth sailing one. There will be fear psychosis, there will be apprehensions. There will be roadblocks. There will be resistances from the people so on and so forth.

Indian government, therefore has simultaneously launched Jawaharal Nehru National Solar Mission, which has set a target of achieving 20 million square meters of installed solar water heaters and a power production of 2,000 MW through off-grid solar systems by 2022. To support the venture, the government has also introduced a capital cost subsidy of 30 per cent and a five per cent interest rate subsidy to financing respective loans. In early 2012, the interest rate was abolished and the capital cost subsidy raised to 40 per cent.

In this connection, one also needs to keep in mind that the entire country does neither get equal sun rays throughout the year, nor does it get favourable winds condition to generate power. So it is just not possible to meet the demand of power generation by means of solar or winds energy. What we need is a judicious mix of all forms of power.

Time has come when India should look beyond Kudankulam and ensure smooth inflow of overseas funds and technology in energy sector- be it nuclear, solar, wind or other forms of renewable energy. Kudankulam built in Indo-Russian joint venture is a case study of successful bilateral cooperation. Now this should be extended further. And that’s not just in large scale or in nuke power, but even in smaller and medium scale and in areas of other forms of clean technology.

Believe you me, things have started looking up. Efforts are on to promote various bilateral cooperation and collaboration irrespective of the scale. The European Business and Technology Centre (EBTC), for instance has been very active in India for the last five years or so.  EBTC is an initiative co-funded by the European Union (EU), and coordinated by EUROCHAMBRES. And you will be glad to know that despite market barriers European Business and Technology Centre (EBTC) has managed to facilitate firming up of as many as 23 collaborations between Indian and European companies in areas of clean technology over the last few year. These market barriers include varying technical standards; lack of access to finance, cross-cultural business issues, detailed market intelligence, securing pilots and establishing demonstration projects, and most importantly, adapting technologies to suit the Indian specific requirement. There is also a growing belief in India that in Europe, solutions exist to address challenges that India is facing in areas of clean technology. These European solutions can now be showcased and demonstrated in India virtually as well as physically.

India and Belgium have agreed to work on signing an MOU to enhance cooperation in renewable energy. This was discussed at a bilateral meeting between Dr. Farooq Abdullah, Minister for New and Renewable Energy, Government of India and Her Royal Highness Princess Astrid of Belgium. Princess Astrid recently visited India as head of the Belgian Economic Mission to India. Dr. Abdullah spoke of India’s plans to add over 30 GW of renewable energy to its energy mix in the next 5 years. He also dwelt on the success of the wind programme as well as the significant cost reductions in solar energy through the Jawahar Lal Nehru National Solar Mission (JNNSM). He also highlighted India’s conducive and investor friendly policy framework for promoting renewable energy in a big way. Dr. Abdullah suggested that India and Belgium had great potential for enhancing cooperation in promoting renewable energy and offered to provide all possible assistance for the purpose. The Belgian delegation also recognized India’s considerable achievements and strengths in renewable energy. After detailed discussions, the two sides agreed to start work on a Memorandum of Understanding (MoU) in the field of Renewable Energy between the Ministry of New and Renewable Energy of the Government of India and the Government of Belgium in order to strengthen, promote and develop renewable energy cooperation between the two countries on the basis of equality and mutual benefit. Both countries also agreed to explore possibilities of coordination in renewable energy through joint Research and Development programmes of mutual interest.