Published in India’s World on February 23, 2025
‘Realising 100 GW of Nuclear Power by 2047 Depends on Building the Right Framework’, says, former Indian Diplomat Rakesh Sood.
February 23, 2025
India has indicated a significant shift in its nuclear energy strategy with the Union Budget 2025-26. Finance Minister Nirmala Sitharaman’s announcement of the Nuclear Energy Mission outlines ambitious targets, modest financial allocations, and significantly, some amendments to the Atomic Energy Act (1962) and the Civil Liability for Nuclear Damage Act (2010), aimed at accelerating private sector participation. With the country’s rapidly growing industrial sector and rising energy demands, the Finance Minister emphasised the urgent need to diversify India’s energy mix, positioning nuclear power as a crucial pillar in the low-carbon development strategy for realising the vision of a “Viksit Bharat” (Developed India) by 2047 and a “net zero” by 2070.
In this interview, Hely Desai sits down with Rakesh Sood, former Indian diplomat and Special Envoy of the Prime Minister for Disarmament and Non-Proliferation, to decode the implications of these potentially transformative nuclear developments following the budget announcement.
Hely Desai: In the Union Budget 2025, nuclear energy received significant attention once again. The Finance Minister set an ambitious target of 100 gigawatts (GW) by 2047—nearly 12 times the current capacity. Given that this goal has been revised several times over the years, do you think it is now achievable? What key challenges have hindered progress so far?
Amb. Rakesh Sood: To put it in context, in the 1970s, India set a target of 10 GW to be achieved by 2000. We are at 8.2 GW today. Each time a new target has been set, it has become more ambitious and, understandably, more difficult to achieve. So, while the targets of 22 GW by 2031 and eventually 100 GW by 2047 are ambitious targets, their realisation will depend on how we prepare the framework to achieve it.
The budget for the Department of Atomic Energy (DAE) for 2025-26 is INR 24,049 crores. Last year, it was INR 24,450 crores, and the year before that, INR 25,882 crores. These are in the same ballpark range and do not reflect either the urgency or the priority to the sector. In the budget speech, the Finance Minister also mentioned an additional INR 20,000 crores for nuclear power, but with no clarity about the time frame for this allocation to materialise. If this amount is spread over the next five years, it would mean an additional INR 4,000 crores per year, which doesn’t significantly address the funding gap, given that the average cost of nuclear power per megawatt in India at $2 million is approx. Rs 17 crores! Therefore, this amount is unlikely to help meet the ambitious targets if the government is the only source of funding. This is why I believe the Finance Minister also mentioned the need to amend existing legislation.
The Atomic Energy Act (1962) places all nuclear energy activities, including materials and technology, under the Department of Atomic Energy (DAE). As a result, all nuclear facilities are under the DAE and all nuclear power reactors are operated by nuclear Power Corporation of India Ltd (NPCIL), a wholly government-owned Public Sector Undertaking (PSU) and a subsidiary of the DAE. To involve the private sector, existing legislation will need to be amended. However, the exact form this will take remains unclear.
One indication is the Request for Proposal (RFP) issued by NPCIL in December 2024, inviting private industries to build two 220 MWe PHWR Bharat Small Reactors. The RFP suggests that “the reactors are planned to be set up with private sector investment, operating within the existing legal framework and approved business models.” The intention is to replace captive power plants, which are currently coal-based, with the DAE-indigenised PHWR models. However, the investor/user/industrial party would construct the project under the supervision and control of the NPCIL, which would take over the plant as the operator. Capital costs, all operating expenses during the life cycle, and decommissioning expenses would be borne by the ‘user’ who can utilise the captive power and/or sell it according to tariffs approved by the government.
However, we still don’t know what the response to the RFP has been. The RFP was issued two months before the amendment announcement and emphasises that it is “within existing legal framework.”
How is India’s energy profile expected to evolve as India pursues the twin goals of Viksit Bhat by 2047 and net-zero by 2070?
Currently, India’s annual per capita income is approximately $2500, and to reach Viksit Bharat (developed country standard according to World Bank), it has to grow to approximately $ 22,000. In 2022-23, India’s per capita annual energy consumption was 1208 kWh while China was 4600kWh, Singapore was 9220 kWh and the US is stable at 80000 kWh. National energy consumption is approx. 10000 TWH; taking into account rising energy efficiencies, it still needs to rise to 35000 TWH by 2047 to achieve Viksit Bharat. India has committed to the target of ‘net-zero’ by 2070. This imposes restrictions on sources for energy growth. In absolute numbers, with the energy composition changing with growing urbanisation, India’s power generation needs to grow from current installed capacity of approx. 450 GW (consisting of 200 GW from renewables covering solar, wind and hydroelectric, 8 GW from nuclear and the balance from fossil fuels) to 4000 GW. Solar, wind, hydel, and biomass can contribute to approximately 1300-1500 GW, leaving a large shortfall of 2500-2700 GW to be met from fossil fuels and nuclear power. Given the net-zero goal, it is clear that nuclear power has to play a much larger role in India’s economic development. Against this backdrop, the Finance Minister’s target of 100 GW of nuclear generation by 2047 seems critical and may need to grow much more by 2070 to achieve net-zero. This would require significant investment in both nuclear power plants and renewable infrastructure, meaning the private sector must play a key role, as the government alone cannot shoulder this energy transition.
Given the potential amendments that may also be in part aimed at advancing Small Modular Reactors (SMR) development, the announcement also sets a target of having five operational SMRs by 2033. Do you think financial and technological challenges could pose significant obstacles for India in achieving this goal?
Yes, absolutely. When discussing these amendments in the context of advancing SMRs, a key driving force is India’s commitment to meeting clean energy targets while ensuring scalability. SMRs are projected to be beneficial for supporting urbanisation, providing power in remote locations, and meeting dedicated industrial energy needs, thus driving sustainable growth across diverse regions.
Now, small modular reactors, typically under 300 MW and modular in design, are projected to play a crucial role in this transition. However, to make this work, it is essential to reach a consensus on a specific SMR design. Only then can it be mass-produced, potentially reducing costs through economies of scale.
Globally, around 80 different SMR designs (variants of Molten Salt Reactors, Pressurised Water Reactors, Molten Metal Reactors and High-Temperature Gas Cooled Reactors) are under development, with only two having reached operational stages. If we look at Russia, they have an operational floating nuclear power plant with an SMR based on the pressurised water reactor (PWR) design, and China has a land-based High-Temperature Gas-cooled Reactor (HTGR). Apart from these two, no other country has reached the operationalisation stage for SMRs yet.
For India, most of our existing nuclear power plants are limited to PHWR technology, which, while effective, is not the most efficient. Post 1974, after India’s Peaceful Nuclear Explosion, India was excluded from international exchanges and cooperation, and PHWR was the only option available at the time. Now, the government is looking to explore more secure and advanced technologies for the future. Collaboration and external expertise will be crucial. This was also one of the primary objectives behind the nuclear deal with the U.S., which aimed to foster international cooperation. This context underpins the Finance Minister’s announcement that India aims to have five operational SMRs by 2033.
Assuming this announcement for amendments is intended to incentivise private sector involvement in nuclear energy, what significant changes do you anticipate in the Atomic Energy Act and the Civil Liability for Nuclear Damage Act, and how might they affect private sector participation?
First, the Atomic Energy Act would need to create a role for the private sector. What this role is intended to be is unclear. Second is the Liability Act. According to the NPCIL RFP (issued a month before the Finance Minister’s budget speech), the private sector role is only that of the investor. If NPCIL is the operator and the project is built to NPCIL’s designs and specifications and under its supervision, then physical protection and nuclear safety will also become NPCIL’s responsibility. The private sector will insist on complete indemnity through a “hold harmless” clause. However, if the private sector entity’s role is to be greater, then it will need to be legally defined as also the sharing of the liability responsibility. In Western countries, private companies are allowed to build and operate nuclear power plants (though designs and operations are regulated by governments), and they are held liable according to their respective liability laws.
The general principle is that, in the event of a nuclear accident, the first priority is to provide immediate relief and assistance to those affected. This is operator liability under the principle of “economic channelling” In India, under our liability law, this assistance is capped at INR 1,500 crores, and if damages exceed that, the government must intervene. This means the operator is required to have an insurance pool for immediate assistance. Under the CLNDA, even if the NPCIL holds a supplier responsible, it can pursue the claim through “legal channelling” but without delaying immediate relief.
Currently, NPCIL, an entirely government-owned agency, acts as the operator, and the government essentially serves as its insurer. After the CLNDA, the ambiguities created by unclear definitions made private players (both foreign and domestic) hesitant to enter the sector. For the private sector to play any significant part in the development of nuclear power, some of these ambiguities in the CLNDA would need to be clarified. So far, the government has relied on Explanations provided through Frequently Asked Questions posted on government department websites, but this has failed to satisfy the private entities.
Ahead of the budget announcement, there was a report in the Economic Times suggesting that civil nuclear energy could be moved from the DAE’s oversight to the Ministry of Power, with fuel handling remaining under the DAE. How likely do you think this shift is, and what challenges might arise from such a transfer?
For a shift like this, I think one of the first things needed is an independent regulator. Currently, we have the Atomic Energy Regulatory Board (AERB). There was a draft bill proposed to make the AERB a statutory body but it didn’t see the light of day. Today, even though the AERB is autonomous in name, it remains part of the Department of Atomic Energy (DAE), meaning it lacks the independence of regulators like the RBI, SEBI, or TRAI that were established through specific acts of Parliament, granting them the necessary autonomy to regulate both government and private sector activities. For example, the RBI supervises even government-owned banks like the SBI, while the SEBI regulates stock exchanges such as the BSE and NSE.
In this context, the nuclear sector would benefit from a similar independent regulator, one that can oversee activities regardless of whether these are carried out by the government or private sector entities. This is a crucial step as we explore private sector participation in nuclear power generation. There would, of course, be mandatory safety and security guidelines. And even if the nuclear material remains under the DAE’s ownership, certain protocols would need to be in place to ensure the DAE can retain ownership without assuming liability in the event of an accident. Establishing these clear boundaries will present legal challenges if the private sector is to play a role in nuclear power generation.
Another important issue would be land acquisition for nuclear power plants (NPPs). Often, communities resist having NPPs near their towns or villages, fearing potential accidents. The question then becomes—who will handle resistance, outreach communication, and compensation? While the government can acquire land to some extent, it typically sets up an industrial zone and allocates it to private companies. But with public resistance, it raises the issue of who will acquire land for private companies looking to build NPPs. For private companies, acquiring land and establishing facilities would be even more challenging.
Additionally, Indian private companies lack the necessary expertise in designing and operating nuclear power plants, as they have never been involved in this sector. So, will they form joint ventures with foreign technology entities like Westinghouse, GE, or Électricité de France? If so, how would these joint ventures be structured? Will the government insist NPCIL be involved as an operator, as with previous deals like the French reactors at Jaitapur? These are questions that remain to be answered as the situation develops.
To conclude, developing a strong, independent regulatory framework and managing land acquisition, safety protocols, and private sector involvement will be key to successful private sector participation in India’s nuclear power generation. These challenges, particularly around regulatory independence and the acquisition of land amidst public resistance, will require clear legal structures and government support to ensure the safe, efficient, and sustainable development of nuclear energy in the country.
How these issues are addressed will likely shape the future of India’s nuclear energy sector as India pursues the twin goals of Viksit Bharat by 2047 and net-zero by 2070.
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RAKESH SOOD 