The nuclear option: Budget bets big on nuclear power, but questions remain

Budget bets big on nuclear power but questions remain

In her Budget speech on Saturday, Union Finance Minister Nirmala Sitharaman announced the development of at least 100 Gw (e) of nuclear energy by 2047. This, she said, was “essential to our energy transition” through a dedicated Nuclear Energy Mission with an allocation of Rs 20,000 crore. This marks a belated recognition of the urgent need to diversify the country’s energy sources to meet climate-change goals. Greater urbanisation, rural-electrification projects, and progressively hotter summers have contributed to surging energy demand over the past decade. But 89 per cent of this demand is being met by fossil fuels, with solar and wind energy facing hurdles in technology and pricing policy. The mission aims to operationalise by 2033 five small modular reactors (SMRs), which are essentially advanced nuclear reactors that have a power capacity of up to 300 Mw (e) per unit or about one-third of the generating capacity of traditional nuclear-power reactors. The announcement also seeks to build swiftly on important concessions by the United States, which last month removed restrictions on the Bhabha Atomic Research Centre, Indira Gandhi Atomic Research Centre, and Indian Rare Earths.

 

India generated 8.18 Gw (e) of nuclear energy in 2024, less than double the 2014 figure of 4.78 Gw (e); by that yardstick, 100 Gw (e) in 22 years is a challenging task. This may be why the government appears to be relying on private-sector participation in SMRs, which has been a key recommendation of the NITI Aayog in the recent past. Greater reliance on the private sector is also clear in reduction in the allocation of the state-owned Nuclear Power Corporation of India Ltd (NPCIL), which operates nuclear-power plants in India, by Rs 472 crore for 2025-26. Likewise, the Budget of the Department of Atomic Energy has been cut by Rs 402 crore. In readiness for private participation, the finance minister announced that the government would amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act (CLNDA). Amending the first law would end NPCIL’s monopoly of nuclear power generation. Though the finance minister did not spell out the nature of amendment to the CLNDA, it is possible that the government will address the key clause that has deterred global private nuclear players after the historic Indo-US nuclear deal imposed liabilities on suppliers as well as operators in the case of nuclear damage.

 

Although SMR technology is relatively new, India has demonstrated its expertise in producing and operating smaller reactors. The majority of the 22 operational indigenously built nuclear reactors in the country have a capacity rating of 220 Mw (e). India also has experience in building an 85 Mw (e) reactor for its nuclear submarine. Design teams under the Department of Atomic Energy have been working on utilising this expertise within a modular factory process, strengthening the potential of technology transfer with private entrants. Despite the advantages of speed of installation, cost-saving, potential enhanced safety and flexibility of installation, there could be unanticipated impediments to India’s SMR ambitions, including the nature of the licensing regime that the government puts in place, and the age-old issue of grid-power pricing, which has plagued power generators for more than three decades. Most analysts say that the 100 Gw (e) target in 22 years will be tough to achieve. The test, as always, will lie in the efficiency of the implementation process.