Nuclear Power Market in India: Status and Outlook

Vijay K. Sazawal, Ph.D.July 21, 2015

Disclaimer: Opinions expressed by the author are solely attributable to him and not to any affiliated company

Presentation Segments

• Past• Present• Future• Bottom Line

Past• India had the most advanced nuclear program in the entire Asia until 1960’s• 1954: Organized a global meeting in New Delhi on nuclear power for peaceful

purposes to announce its 3-stage nuclear program • 1955: India chaired the Geneva Conference which was a prelude to the

formation of the IAEA• 1955: Designed the first industrial scale 1 MW reactor that began operating in

1956 using enriched uranium and technical support provided by UKAEA • 1955: The U.S. Joint Committee on Atomic Energy visited India and offered

Heavy Water to the Indian nuclear program• 1960: CIRUS, a 40 MW reactor, attains criticality (Canada-India-US

partnership)• 1963: India signs with GE and Bechtel for the first two LWR’s in Asia• 1969: TAPS 1 & 2 (both BWR’s) begin operations

Present - 1• India has the largest electric power grid in any developing nation

- It has 14th largest power system in the world- IMF says in 2015-2016, Indian growth rate will be 7.5%, and its industrial revolution has hardly begun- Indian population will exceed China’s in the next decade

• India is among the top greenhouse gas polluters in the world- 2020: China (24%), U.S. (13%), EU (8%), and India (7%)- India is making public commitments to change its energy mix by increasing dependence on clean energy

• IAEA, EIA, WNA, Ux Consulting …- Global growth of nuclear power will be driven by non-OECD countries- 2/3 of all new nuclear builds will be in China, Russia, India and South Korea

• McKinsey India Report 2014- “India will be one of the most energy import dependent large economies”- Nuclear capacity will jump from 5.5 GW (2% of total power supply) in 2010 to 23 GW (7%) in 2030, and 25% by

2050- Indian power production lags total power demand by 9-10%

• India has 21 reactors in commercial operations, 6 under construction, 4 licensed to start construction and another 6 in advanced stages of securing construction licenses

Present - 2• Following the agreement-in-principle on the 123 Agreement with the U.S., the Indian government

announced plans for expansion of nuclear power to 63,000 MW by 2032, out of which 40,000 MW was expected to be procured from outside (LWR’s)- In 2008, India conveyed through an official letter that it will provide two reactor plant sites to U.S. nuclear reactor suppliers for

constructing 2 to 6 units at each site (10,000 MW each)- In 2009, India announced locations of the two nuclear power plant sites for Westinghouse and GEH, and established project teams to

start site work and commence negotiations with U.S. vendors- In 2010, India passed a nuclear liability law, and subsequently signed the Convention of Supplementary Compensation for Nuclear

damage (CSC) in Vienna on 27 October 2010- In 2015, the U.S. and India reached an agreement that broke the logjam on nuclear liability- In 2015, the Indian Nuclear Insurance Pool (INIP) came into force- In 2015, India plans to deposit the instrument of acceptance of the CSC with the IAEA

• Progress on U.S.-India nuclear projects- Regulatory approval process for Mithi Virdi (Gujarat) and Kovvada (AP) is underway (MOEF/AERB/State/Local)- Land Acquisition Bill in the Parliament (“Public Acceptance”)- “Pre-Early Works” feasibility studies related to licensing of AP-1000 at a site in India- NPCIL Discussions with GE and W are ongoing, but frustratingly slow (differing interpretations of the 2008 official letter)

• Patience gets rewarded- Canada awarded a contract to provide 7.1 million pounds of uranium through 2020, first delivery in September

2015, $260 million contract - Tribute to former Cameco CEO, Jerry Grandey

Future• Nuclear Projects – how long is long?

- Czech Republic: Temelin-3&4: 2008 – 2014, CEZ cancels tender (Dukovany-5 jumps ahead?)- U.K.: Hinkley Point C: 2009 – 2023, Austria files legal action in 2015 (delay of 6 months to 5 years?)

• The export business model for civil nuclear reactors in non-OECD countries has changed- India: Negotiates with a sole-sourced supplier in a team environment to ensure compliance with their DAE

orders using a system similar to Critical Decision Points in the DOE Order: 413.3B, requiring approval of Performance Baseline (called Techno-Commercial Offer - TCO - in India) before a contract for construction is authorized

- Other emergent nuclear power states: IGA’s to secure “solutions not just reactors” – meaning new deals have to address some or all of the following: affordability, financing, skills training, jobs creation, localization of supply chain, related infrastructure development, reactor operations support, and developing safety culture

• There is a new Government in New Delhi with focused agenda and new priorities- The new Government has promised electricity to all citizens in less than a decade- After a year of analyses, new assessment is beginning to emerge on the mix of power generation- Planners are concerned that potential for nuclear growth through imports may not be realized- “Plan B” has emerged that will fine-tune the entire Indian 3-stage nuclear power program if no convergence

is reached with western reactor suppliers. Imports are part of the Stage-1 program only

Bottom Line• India is an attractive market for U.S. Suppliers, particularly in high technology

- The U.S. and India are developing strong strategic ties and collaborating on a wide spectrum of projects- U.S. suppliers in the defense sector, renewable energy sector, space missions, etc. are making significant

investments in India- India is among the top 5 countries in energy consumption, it announced plans to import 40 GWe of nuclear

power in the 1st Stage of the 3-stage nuclear power- NPCIL is one of the most successful vertically integrated public nuclear companies in the world. It builds

standardized 700 MW PHWR’s for under $2,000/Kw. Its financial books are audited per western standards - India has a cumbersome bureaucracy, and so a supplier (domestic or foreign) has to be patient, sincere,

creative and flexible in order to be successful• 10th Anniversary Celebration of the U.S. India Nuclear Deal was celebrated in Washington on

7/13/15- Vice President Biden: “The historic civil nuclear deal was a vote for India and not just for civil nuclear

cooperation”- Assistant Secretary of State Biswal: “Over the next ten years, India will need to provide 400 million of its

citizens with reliable energy”• In Closing

- “If you want to travel fast, go alone. If you want to travel far, go together” (Ms. Biswal)- American NSSS suppliers and Indians have to get the TCO discussions on fast track and come to a closure

soon. Otherwise, a momentous opportunity will be lost