Brahma Chellaney, The Hindu, November 19, 2014
New developments highlight the growing travails of the global nuclear-power industry. France — the “poster child” of atomic power — plans to cut its nuclear-generating capacity by a third by 2025 and focus instead on renewable sources, like its neighbours, Germany and Spain. As nuclear power becomes increasingly uneconomical at home because of skyrocketing costs, the U.S. and France are aggressively pushing exports, not just to India and China, but also to “nuclear newcomers,” such as the cash-laden oil sheikhdoms. Still, the bulk of the reactors under construction or planned worldwide are located in just four countries — China, Russia, South Korea and India.
Six decades after Lewis Strauss, chairman of the U.S. Atomic Energy Commission, claimed that nuclear energy would become “too cheap to meter,” nuclear power confronts an increasingly uncertain future, largely because of unfavourable economics. The International Energy Agency’s World Energy Outlook 2014, released last week, states: “Uncertainties continue to cloud the future for nuclear — government policy, public confidence, financing in liberalized markets, competitiveness versus other sources of generation, and the looming retirement of a large fleet of older plants.”
Heavily subsidy reliant
Nuclear power has the energy sector’s highest capital and water intensity and longest plant-construction time frame, making it hardly attractive for private investors. Plant-construction time frame, with licensing approval, still averages almost a decade, as underscored by the new reactors commissioned in the past decade.
The key fact about nuclear power is that it is the world’s most-subsidy-fattened energy industry, even as it generates the most dangerous wastes whose safe disposal saddles future generations. Commercial reactors have been in operation for more than half-a-century, yet the industry still cannot stand on its own feet without major state support. Instead of the cost of nuclear power declining with the technology’s maturation — as is the case with other sources of energy — the costs have escalated multiple times.
In this light, nuclear power has inexorably been on a downward trajectory. The nuclear share of the world’s total electricity production reached its peak of 17 per cent in the late 1980s. Since then, it has been falling, and is currently estimated at about 13 per cent, even as new uranium discoveries have swelled global reserves. With proven reserves having grown by 12.5 per cent since just 2008, there is enough uranium to meet current demand for more than 100 years.
Yet, the worldwide aggregate installed capacity of just three renewables — wind power, solar power and biomass — has surpassed installed nuclear-generating capacity. In India and China, wind power output alone exceeds nuclear-generated electricity.
Before the 2011 Fukushima disaster, the global nuclear power industry — a powerful cartel of less than a dozen major state-owned or state-guided firms — had been trumpeting a global “nuclear renaissance.” This spiel was largely anchored in hope. However, the triple meltdown at Fukushima has not only reopened old safety concerns but also set in motion the renaissance of nuclear power in reverse. The dual imperative for costly upgrades post-Fukushima and for making the industry competitive, including by cutting back on the munificent government subsidies, underscores nuclear power’s dimming future.
It is against this background that India’s itch to import high-priced reactors must be examined. To be sure, India should ramp up electricity production from all energy sources. There is definitely a place for safe nuclear power in India’s energy mix. Indeed, the country’s domestic nuclear-power industry has done a fairly good job both in delivering electricity at a price that is the envy of Western firms and, as the newest indigenous reactors show, in beating the mean global plant-construction time frame.
No competitive bidding
India should actually be encouraging its industry to export its tested and reliable midsize reactor model, which is better suited for the developing countries, considering their grid limitations. Instead, Prime Minister Manmohan Singh’s government, after making India the world’s largest importer of conventional arms since 2006, set out to make the country the world’s single largest importer of nuclear power reactors — a double whammy for Indian taxpayers, already heavily burdened by the fact that India is the only major economy in Asia that is import-dependent rather than export driven.
To compound matters, the Singh government opted for major reactor imports without a competitive bidding process. It reserved a nuclear park each for four foreign firms (Areva of France, Westinghouse and GE of the U.S., and Atomstroyexport of Russia) to build multiple reactors at a single site. It then set out to acquire land from farmers and other residents, employing coercion in some cases.
Having undercut its leverage by dedicating a park to each foreign vendor, it entered into price negotiations. Because the imported reactors are to be operated by the Indian state, the foreign vendors have been freed from producing electricity at marketable rates. In other words, Indian taxpayers are to subsidise the high-priced electricity generated.
Westinghouse, GE and Areva also wish to shift the primary liability for any accident to the Indian taxpayer so that they have no downside risk but only profits to reap. If a Fukushima-type catastrophe were to strike India, it would seriously damage the Indian economy. A recent Osaka City University study has put Japan’s Fukushima-disaster bill at a whopping $105 billion.
To Dr. Singh’s discomfiture, three factors put a break on his reactor-import plans — the exorbitant price of French- and U.S.-origin reactors, the accident-liability issue, and grassroots opposition to the planned multi-reactor complexes. After Fukushima, the grassroots attitude in India is that nuclear power is okay as long as the plant is located in someone else’s backyard, not one’s own. This attitude took a peculiar form at Kudankulam, in Tamil Nadu, where a protest movement suddenly flared just when the Russian-origin, twin-unit nuclear power plant was virtually complete.
India’s new nuclear plants, like in most other countries, are located in coastal regions so that these water-guzzling facilities can largely draw on seawater for their operations and not bring freshwater resources under strain. But coastal areas are often not only heavily populated but also constitute prime real estate. The risks that seaside reactors face from global-warming-induced natural disasters became evident more than six years before Fukushima, when the 2004 Indian Ocean tsunami inundated parts of the Madras Atomic Power Station. But the reactor core could be kept in a safe shutdown mode because the electrical systems had been installed on higher ground than the plant level.
Dr. Singh invested so such political capital in the Indo-U.S. civil nuclear agreement that much of his first term was spent in negotiating and consummating the deal. He never explained why he overruled the nuclear establishment and shut down the CIRUS research reactor — the source of much of India’s cumulative historic production of weapons-grade plutonium since the 1960s. In fact, CIRUS had been refurbished at a cost of millions of dollars and reopened for barely two years when Dr. Singh succumbed to U.S. pressure and agreed to close it down.
Nevertheless, the nuclear accord has turned out to be a dud deal for India on energy but a roaring success for the U.S. in opening the door to major weapon sales — a development that has quietly made America the largest arms supplier to India. For the U.S., the deal from the beginning was more geostrategic in nature (designed to co-opt India as a quasi-ally) than centred on just energy.
Even if no differences had arisen over the accident-liability issue, the deal would still not have delivered a single operational nuclear power plant for a more than a decade for two reasons — the inflated price of Western-origin commercial reactors and grassroots opposition. Areva, Westinghouse and GE signed Memorandums of Understanding with the state-run Nuclear Power Corporation of India Limited (NPCIL) in 2009, but construction has yet to begin at any site.
India has offered Areva, with which negotiations are at an advanced stage, a power price of Rs.6.50 per kilowatt hour — twice the average electricity price from indigenous reactors. But the state-owned French firm is still holding out for a higher price. If Kudankulam is a clue, work at the massive nuclear complexes at Jaitapur in Maharashtra (earmarked for Areva), Mithi Virdi in Gujarat (Westinghouse), and Kovvada in Andhra Pradesh (GE) is likely to run into grassroots resistance. Indeed, if India wishes to boost nuclear-generating capacity without paying through its nose, the better choice — given its new access to the world uranium market — would be an accelerated indigenous programme.
Globally, nuclear power is set to face increasing challenges due to its inability to compete with other energy sources in pricing. Another factor is how to manage the rising volumes of spent nuclear fuel in the absence of permanent disposal facilities. More fundamentally, without a breakthrough in fusion energy or greater commercial advances in the area that the U.S. has strived to block — breeder (and thorium) reactors — nuclear power is in no position to lead the world out of the fossil-fuel age.
(Brahma Chellaney is a geostrategist and author.)