India will invite private firms to invest about $26 billion in its nuclear energy sector to increase the amount of electricity from sources that don’t produce carbon dioxide emissions, two government sources told Reuters.
This is the first time New Delhi is pursuing private investment in nuclear power, a non-carbon-emitting energy source that contributes less than 2% of India’s total electricity generation.
The funding would help India to achieve its target of having 50% of its installed electric generation capacity use non-fossil fuels by 2030, up from 42% now.
The government is in talks with at least five private firms including Reliance Industries, Tata Power, Adani Power and Vedanta to invest around 440 billion rupees ($5.30 billion) each, the two sources, who are directly involved in the matter, said last week.
The federal Department of Atomic Energy and state-run Nuclear Power Corp of India Ltd (NPCIL) have held multiple rounds of discussions with the private companies in the past year on the investment plan, the sources said.
The Department of Atomic Energy, NPCIL, Tata Power, Reliance Industries, Adani Power and Vedanta did not respond to queries sent by Reuters.
With the investment, the government hopes to build 11,000 megawatts (MW) of new nuclear power generation capacity by 2040, said the sources, who did not want to be identified as the plan is still being finalised.
NPCIL owns and operates India’s current fleet of nuclear power plants, with a capacity of 7,500 MW, and has committed investments for another 1,300 MW.
The sources said under the funding plan the private companies will make the investments in the nuclear plants, acquire land, water and undertake construction in areas outside the reactor complex of the plants.
But, the rights to build and run the stations and their fuel management will rest with NPCIL, as allowed under the law, they said.
The private companies are expected to earn revenue from the power plant’s electricity sales and NPCIL would operate the projects for a fee, the sources said.
“This hybrid model of nuclear power project development is an innovative solution to accelerate the nuclear capacity,” said Charudatta Palekar, an independent power sector consultant who formerly worked for PwC.
The plan will not require any amendment to the India’s Atomic Energy Act of 1962 but will need a final go-ahead from the Department of Atomic Energy, said one of the two sources.
Indian law bars private companies from setting up nuclear power plants but allows them to supply components, equipment and sign construction contracts for work outside of the reactors.
New Delhi has not met its nuclear power capacity addition targets for years mainly because it could not procure nuclear fuel supplies. However in 2010, India struck a deal with the United States for supplies of reprocessed nuclear fuel.
India’s stringent nuclear compensation laws have hampered talks with foreign power plant builders such as General Electric and Westinghouse. The country has deferred a target to add 2,000 MW of nuclear power from 2020 to 2030.
