Suitable financing model needed to cut high cost of LWRs : Deloitte

Imported light water reactors are likely to play a key role in India's nuclear capacity addition

Imported light water reactors (LWRs) will play a key role in India's nuclear capacity addition. However, due to the high capital costs of LWRs and the high interest rate regime in the country, the resulting tariff will be high and it will not be competitive with rupee financing from domestic institutions. The nuclear power with low fuel cost escalation will be competitive to meet the energy requirements of the country, provided there will be a suitable financing mechanism to be put in place.

Deloitte in its report on ''Nuclear power in India-A way forward'' however, said if the LWRs are funded with longer duration and cheaper debt then tariff becomes comparable to pressurized heavy water reactors (PHWRs) and will be able to compete with fossil fuels. Currently, the state-run Nuclear Power Corporation is in the midst of procurement of several LWRs with foreign collaborations with unit sizes ranging between 1,000 MW and 1,650 MW. The report was released by Atomic Energy Commission chairman RK Sinha at the Indian Nuclear Energy Summit.

''Nuclear Power Corporation is correctly following a strategy of a combination of indigenous pressurized heavy water reactors (PHWRs) and imported LWRs. Given the price sensitivity of electricity market in India, it is important to get right finance for LWRs - both tenure and rate- to get a competitive tariff,'' Deloitte said in the report.

According to the report, there will be opportunities in the fuel value chain including mining, fuel processing, enrichment, reprocessing, waste management, heavy water production.  There will be more joint ventures or acquisition by Indian companies to gain expertise in various areas of nuclear supply chain. ''This will help in possible localization of design and production of equipment for nuclear power plants. This association could possibly be extended to supply conventional equipment to other countries,'' Deloitte observed.

Post Fukushima nuclear accident there has been a lot of apprehension on safety of nuclear power and the country has seen public resistance at several proposed nuclear power plant sites. Deloitte suggests that the apprehensions on nuclear power need to be allayed by familiarizing general public on Indcia's approach to safety standards, its policies and regulations on safety and its spectacular safety record.