India is poised
to take a monumental leap in its journey toward sustainable energy with the
introduction of Bharat Small Reactors (BSRs)—a groundbreaking initiative
to harness nuclear power for grid decarbonization. Spearheaded by the Nuclear
Power Corporation of India Limited (NPCIL), the recently issued Request for
Proposal (RFP) marks a pivotal moment in the nation’s energy strategy. Designed
as compact and efficient Pressurized Heavy Water Reactors (PHWRs), these
twin 220 MWe reactors aim to serve as a reliable, zero-carbon energy source for
industries and the grid. This initiative signals India's commitment to
innovative energy solutions that not only strengthen energy security but also
align with global climate action imperatives because nuclear energy stands out
as a highly efficient and environmentally sustainable power source, requiring
minimal land per megawatt of capacity compared to other energy technologies.
Its compact footprint makes it especially valuable in land-scarce country like
India. Moreover, nuclear power boasts the lowest lifecycle carbon dioxide
emissions among all major energy sources, including renewables, as it generates
electricity without combustion. This unique combination of efficiency and
environmental performance positions nuclear energy as a vital tool in combating
climate change and supporting global decarbonisation efforts. While this approach may not align with the current international trend of modular, factory-built solutions, opening the nuclear sector to private partnerships represents a significant policy shift.
2. In
this blog, we will delve deeper into the nuances of the RFP issued by NPCIL for
the ambitious Bharat Small Reactors project with an aim to provide a concise
summary of the proposal, discuss critical issues that need attention, and
identify the leading power sector companies likely to qualify based on net
worth criteria. It will also explore the expected project costs and calculate
the estimated Levelized Cost of Electricity (LCOE), offering insights into the
economic viability of this initiative. A detailed look into how uranium fuel
will be sourced—both domestically and through imports—and managed throughout
the project lifecycle will also be covered. Finally, the blog will examine the
broader challenges, such as regulatory compliance, high eligibility thresholds,
and the complexities of transitioning to nuclear power as a cornerstone of
India’s decarbonization strategy.
3. Salient
features of the RFP
The Request for
Proposal (RFP) for the setup of 220 MWe Bharat Small Reactors (BSRs) outlines a
comprehensive framework for industries to participate in India's nuclear energy
expansion. Key features include:
· Type and Capacity:
o Deployment of Pressurized Heavy Water
Reactors (PHWRs), with a combined capacity of 2 x
220 MWe, primarily for captive power consumption.
o
Operations will be managed by NPCIL.
· · Site Requirements:
- Land requirement: 331 hectares for a 1 km
exclusion zone or 87 hectares for a 0.5 km radius.
- Safety compliance: Sites must avoid seismic zones and be
distanced from potential hazards.
- Regulatory
Framework: Adherence to Atomic Energy Regulatory Board (AERB)
standards across all phases—siting, construction, operation, and
decommissioning—is mandatory.
- Technical
Specifications:
- Cooling systems: Options for natural or induced draft
towers.
- Water requirements: Inland sites need 4800 m³/hr,
while coastal sites use seawater.
- Implementation
Timeline:
- Site approvals within 6–12 months.
- Construction period: Approximately 42-48 months
post-approval.
- Operational life: 40 years, extendable.
- Decommissioning as per Atomic Energy Act guidelines.
- Commercial
and Financial Aspects:
- Eligibility: Users must consume 2500 MUs annually
and have a net worth of ₹3000 crores.
- Financial obligations: Users bear the CAPEX, OPEX, and
decommissioning costs, with NPCIL expertise fees starting at ₹0.60/kWh,
increasing by ₹0.01 annually.
- Earnest Money Deposit (EMD): ₹10 crores.
- Proposal
Submission:
- Pre-proposal meeting on January 21, 2025.
- Submission deadline: March 31, 2025, 11:00 AM IST.
- Proposal opening: April 4, 2025, 2:00 PM IST.
- Submission process: Single-stage, sealed envelope with
mandatory documentation (e.g., Integrity Pact, NDA).
- Additional
Provisions:
- Exit Clause: Users cannot exit post-construction
commencement, except under exceptional circumstances.
- Force Majeure: Includes natural or political
events; NPCIL bears no liability under these conditions.
- Regulatory Oversight: AERB licenses required for
all project stages, with periodic compliance checks
4. Key Challenges: The Request for Proposal (RFP) offers a
promising framework for industries to play a vital role in advancing India’s
clean energy goals. However, it comes with substantial financial and regulatory
commitments that pose significant challenges. A key concern is the project’s
financial viability, as the entire burden of Capital Expenditure (CAPEX),
Operational Expenditure (OPEX), and decommissioning costs falls solely on the
user. This heavy financial responsibility risks deterring participation,
particularly from industries that may find the investment and long-term
obligations unsustainable.
a) Financial
Viability:
o
Entire financial burden (CAPEX, OPEX, taxes, and
decommissioning) lies on the user.
o
High upfront costs and long payback periods may
deter participation.
o Recommendation: Introduce
cost-sharing mechanisms, financial incentives, or guarantees.
b)
Land Requirements:
o
Substantial land requirement (331 hectares for 1
km exclusion zone) limits participation.
o
Challenges in securing large contiguous plots.
c)
Water Requirements:
o
Inland sites require 4800 m³/hr of water, posing
challenges in water-scarce regions.
o Recommendation: Introduce water
conservation measures or alternative cooling technologies.
d)
Regulatory and Approval Delays:
o
Lengthy and complex approval processes involving
AERB, DAE, and MoEFCC.
o
Potential delays in siting, construction, and
operation.
o
Recommendation: Provide clear timelines and a
single-window clearance system.
e)
Exit Clause:
o
Users exiting post-construction lose all
investments, discouraging participation.
o
Recommendation: Allow more flexible exit options
or partial compensation mechanisms.
f)
Tariff Regulation for Third-Party Sales:
o
Tariffs set by DAE could reduce commercial
viability.
o
Recommendation: Clarify tariff
mechanisms and allow competitive or market-based pricing.
g)
Expertise Fees:
o
Annual increase in NPCIL’s expertise fee
(₹0.60/kWh, increasing by ₹0.01 annually) adds a growing cost burden.
o
Recommendation: Cap the expertise fee to
ensure cost predictability.
h)
Force Majeure Provisions:
o
NPCIL’s liability excluded under force majeure,
but user risks remain unaddressed.
o
Recommendation: Add provisions to share
costs or pause obligations during such events.
i)
Spent Fuel and Decommissioning Costs:
o
Users bear responsibility for complex and costly
spent fuel storage and decommissioning.
o Recommendation:
Provide detailed cost estimates and consider shared responsibilities with
NPCIL.
j)
Ambiguities in Fuel and Heavy Water
Management:
o
Unclear terms in the tripartite agreement for
leasing and supply of fuel and heavy water.
o Recommendation:
Specify leasing terms, costs, and supply timelines.
k)
User Eligibility Criteria:
o
High thresholds (₹3000 Crore net worth and 2500
MUs annual consumption) limit participation to large players.
l)
Lack of Incentives for Early Completion:
o
No bonuses or incentives for timely or early
project milestones.
o Recommendation:
Include reward mechanisms to encourage faster execution.
m)
Developer to be Captive User:
o
Long-Term Commitment: Developers must commit to
consuming a majority (51% or more as per electricity rules) of the electricity
generated for 40 years, which is an exceptionally long-time frame for
industrial operations.
o
Changing Energy Needs: Industries may face
fluctuations in electricity demand due to market conditions, technological
advancements, or operational downsizing, making it difficult to consistently
consume 51% of the output.
o
Risk of Overcommitment: Developers may
overestimate their energy needs at the start of the project, leading to
underutilization of the power plant capacity in later years.
o
Lack of Flexibility: The strict definition of
captive consumption limits options for selling surplus power to third parties,
even when industry requirements fall below the 51% threshold.
o
Regulatory Compliance: Ensuring compliance with
captive user norms for 40 years could be administratively and legally
challenging, especially with evolving regulations.
5. These
issues highlight the need for revision in RFP to ensure greater feasibility and
inclusivity for developers.Addressing these issues through cost-sharing
mechanisms, streamlined regulatory approvals, and flexible agreements could
significantly enhance the viability and attractiveness of this transformative
project.
6. User or Beneficiary?
In the context of the RFP, the
"User" refers to the industrial or commercial entity responsible for
setting up and consuming more than 51% of the net electricity generated by the
Bharat Small Reactors (BSRs) and do third party sale for the rest. The User
also serves as the Funding Provider, bearing the entire lifecycle costs
of the project, including Capital Expenditure (CAPEX), Operational Expenditure
(OPEX), and decommissioning. Additionally, the User acts as the Land
Provider, ensuring the availability of suitable and compliant land for the
nuclear power plant.
7. Why the Term "User"?
The term "User" emphasizes
that the entity is not just a passive investor, but an active participant and
end-user of the electricity generated. The structure allows the User to align
the project with their industrial or commercial energy needs while maintaining
operational collaboration with NPCIL with followings:
a) Feeding into the Grid
· Primary Purpose: The generated electricity is primarily for the User’s captive
consumption.
· Third-Party Sales: If the User wishes to sell surplus electricity to other customers, it
may be fed into the grid for distribution to third parties.
b) Regulation of Grid-Connected
Electricity
Electricity fed into
the grid will be regulated by the following authorities:
c) Department of Atomic Energy (DAE)
·
Role: DAE
determines the tariff for electricity sold to third parties as per the Atomic
Energy Act, 1962.
· Rationale:
Since the project involves nuclear power, which is a strategic and regulated
domain in India, DAE has overarching authority over its commercial aspects.
d) State and Central Electricity Regulatory
Commissions (SERCs and CERC)
· Role:
Regulatory commissions oversee compliance with:
o
Grid
code requirements.
o
Scheduling
and dispatch regulations.
o
Tariff
structures for third-party sales.
·
Applicable Laws: Electricity Act, 2003 and relevant state regulations.
e) Atomic Energy Regulatory Board (AERB)
· Role:
Ensures safety and compliance of nuclear facilities, including aspects that
could impact grid stability or radiological safety during grid operations.
8. Eligible Power Companies
meeting net-worth criteria
Among the listed companies, besides NPCIL
(Nuclear Power Corporation of India Limited), NTPC Limited & L&T
have some experience with nuclear power
projects. However, NPCIL is the project proponent in this case.
Other Power Companies Without
Nuclear Power Experience
The following power companies while
meeting the net-worth criteria do not currently operate in nuclear power:
- Tata
Power
- Adani
Power
- Power
Grid Corporation
- NHPC
- JSW
Energy
- NLC
India
- SJVN
- Reliance
Power
- Torrent
Power
These companies primarily focus on thermal, hydro, solar, wind, and
other renewable energy sources but lack experience in nuclear power generation.
9. LCOE
Calculation for Bharat Small Reactor
Key Assumptions:
- Capital
Cost: ₹15
crore per MW for a 440 MW plant.
- Plant
Load Factor (PLF): 68.5%.
- Operational
Life: 40
years.
- Discount
Rate: 10%.
- Operation
& Maintenance (O&M) Cost: ₹50 lakhs per MW per year.
- Fuel
Cost: ₹2 per
kWh. (basis worked out in para-13)
- Auxiliary
Consumption: 11.75%
(with cooling tower)
10. LCOE Calculation Details:
a) Total Capital Cost:
₹15 crore/MW×440 MW=₹6600 crore
b) Annual Electricity Generation:
440 MW×8760 hours/year×0.685=2,642,928 MWh/year or 2642.93 MU/year
c) Net Generation
after Auxiliary Consumption= 2642.93*(1-.1175) =
2332.38 MU/year
c) Capital Recovery Factor (CRF):
CRF=(r*(1+r) ^n) /((1+r)
^n−1), where r=0.10, n=40.
CRF≈0.10275
d) Annualized Capital Cost:
₹6600 crore×0.10275=₹678.15 crore/year
f) Operation & Maintenance
(O&M) Cost:
₹0.5 crore/MW/year×440 MW=₹220 crore/year
g) Fuel Cost (break-up in para-13):
₹2 per kWh×2642.93 MU/year=₹528.59 crore/year
h) Total Annual Cost:
₹678.15 crore+₹220 crore+₹528.59 crore=₹1426.74 crore/year
i)
Estimated Levelized Cost of Electricity (LCOE):
LCOE=Total Annual Cost / Annual Electricity Generation.
LCOE=₹1426.74 crore/year /2332.38 MU/year ≈ ₹6.11 per kWh
Since final LCOE should also include NPCIL Expertise Fee: ₹0.60
per kWh, LCOE will be = ₹6.11 per kWh+₹0.60
per kWh =₹ 6.76 per kWh
Based on given assumptions, the Levelized Cost of Electricity (LCOE) for
the Bharat Small Reactor project is approximately ₹6.76 per kWh inclusive of
NPCIL expertise fee.
11. Fuel Supply Chain for Nuclear
Reactors
a. Uranium Supply
- Source: Natural uranium, used as fuel
in PHWRs, is procured and processed domestically or through imports.
- Domestic
Sources:
- Uranium is mined and processed by Uranium Corporation of India
Limited (UCIL), a public sector enterprise under the DAE.
- Domestic uranium mining operations include facilities in
Jharkhand, Andhra Pradesh, and Meghalaya.
- Imported
Uranium:
- Additional uranium is imported to meet demand, under international
agreements and safeguards.
b. Fuel Fabrication
- Nuclear
Fuel Complex (NFC):
- NFC, an entity under the DAE, fabricates
the fuel assemblies required for PHWRs.
- It processes uranium into natural uranium
dioxide (UO₂) pellets, which are then loaded into zirconium alloy
cladding to form fuel bundles.
c. Heavy Water Supply
- Heavy
Water Board (HWB):
- Another entity under the DAE, the HWB
produces and supplies heavy water (D₂O), which acts as both a moderator
and coolant in PHWRs.
d. Fuel Leasing and Supply Agreement
For the BSR project:
- A tripartite
agreement among the User, NPCIL, and the DAE will govern the leasing
and supply of fuel and heavy water.
- Ownership: The fuel, spent fuel, and
heavy water remain the property of the DAE throughout the plant’s
lifecycle.
e. Key International Agreements for
Imported Fuel
India sources uranium under its civil
nuclear cooperation agreements with countries such as:
- Canada, Kazakhstan, Russia,
and Australia.
- These
agreements ensure a steady supply of uranium for India’s safeguarded
reactors, including those used for power generation.
f. Spent Fuel Management
- The
spent fuel remains the property of the DAE and is managed under its
guidelines.
- Long-term
storage and reprocessing are overseen by DAE facilities.
g. Assurance of Supply
- DAE
ensures a secure and continuous supply of fuel to meet the operational
demands of the reactors.
- NPCIL
facilitates the coordination between the User (industrial entity) and DAE
for timely delivery and management of fuel.
12. Annual Requirement of Fuel
To estimate the annual uranium
requirement for a 220 MWe Bharat Small Reactor (PHWR), we consider the
following factors and data:
Key Data and Assumptions
a)
Plant Load Factor (PLF):
o PLF = 68.5% (as stated in the RFP,
could increase to 72.5%).
b)
Annual Energy Generation per Reactor:
o Rated capacity: 220 MWe.
o Annual hours: 24x365=8760 hours/year.
o Annual energy output (at 68.5% PLF):
Energy=220 MW×8760 hours×0.685
=1,321,716 MWh/year
c)
Twin Reactor Plant Output:
o For two reactors: 1,321,716 MWh×2=2,643,432 MWh/year
o = 2643 MU
d)
Fuel Consumption Rate:
o PHWRs typically require about 27
kg of natural uranium per GWh (as per norms in the RFP, likely to reduce to
25 kg/GWh with efficiency improvements).
e)
Conversion to Uranium Requirement:
o Total generation: 2,643.432 GWh/
o Using 27 kg/GWh:
Uranium Required=2,643.432 GWh/year×27 kg/GWh=71,373 kg/year
71.37 tonnes/year
o Using 25 kg/GWh:
Uranium Required=2,643.432 GWh/year×25 kg/GWh=66,086 kg/year
o 66.09 tonnes/year.
j)
Estimated Uranium Requirement:
a.
71.37
tonnes/year at 27 kg/GWh.
b.
66.09
tonnes/year at 25 kg/GWh (if efficiency improves).
This is for the twin-reactor (440
MWe) plant operating at 68.5% PLF. Adjustments may be needed for different PLF
values or operational conditions.
13. Fuel Price / KWh estimations
a.
Components of ₹2 per kWh
The ₹2 per kWh
accounts for Raw Fuel Cost of natural uranium, whether domestically
mined or imported, Fuel Processing and Fabrication at Nuclear Fuel
Complex (NFC) for Converting uranium ore into fuel-grade material and
fabricating it into usable fuel assemblies, Heavy Water Costs required for
PHWR, Fuel Transportation, Waste Management and Overheads
and Safety Compliance:
b. Industry
Benchmarks
The ₹2 per
kWh value is derived from industry standards and benchmarks for nuclear
reactors, ensuring that all associated costs beyond raw uranium are included.
While the raw uranium cost alone may be lower, processing and ancillary expenses significantly add to the overall
cost.
c. Raw
Uranium Cost (~₹0.30 per kWh)
- Uranium Cost:
- For 70 MT of uranium at ₹10,000
per kg, the cost per kWh was calculated as approximately ₹0.26–₹0.30.
- Percentage of Total: 15%.
d. Fuel
Processing and Fabrication (~₹0.60 per kWh)
- Processing Costs:
- Conversion of natural uranium ore
into fuel-grade uranium dioxide (UO₂).
- Fabrication of fuel assemblies at
the Nuclear Fuel Complex (NFC).
- Percentage of Total: 30%.
e. Heavy
Water Costs (~₹0.50 per kWh)
- Role of Heavy Water:
- Acts as both moderator and coolant
in PHWRs.
- The reactor requires regular
replenishment of heavy water due to losses during operation.
- Costs:
- Heavy Water Board (HWB) charges
are significant, given the high cost of producing heavy water.
- Percentage of Total: 25%.
f. Spent
Fuel Management (~₹0.25 per kWh)
- Storage and Handling:
- Safe storage of spent fuel in
on-site cooling ponds for 10 years.
- Transition to Away-From-Reactor
(AFR) storage facilities for 25+ years.
- Reprocessing Costs:
- If reprocessed, costs for
recovering usable material and managing radioactive waste increase.
- Percentage of Total: 12.5%.
g. Fuel
Transportation (~₹0.15 per kWh)
- Transport Logistics:
- Secure transport of processed fuel
from fabrication plants to reactor sites.
- Compliance with safety and
regulatory requirements for radioactive materials.
- Percentage of Total: 7.5%.
h. Overheads
and Safety Compliance (~₹0.20 per kWh)
- Safety and Oversight:
- Costs for regulatory compliance
with the Atomic Energy Regulatory Board (AERB).
- Inventory reserves for continuous
operation.
- Percentage of Total: 10%.
Summary of
₹2 per kWh Fuel Cost Breakdown
|
Component
|
Cost
(₹/kWh)
|
Percentage
|
|
Raw Uranium
|
₹0.30
|
15%
|
|
Fuel
Processing & Fabrication
|
₹0.60
|
30%
|
|
Heavy Water
|
₹0.50
|
25%
|
|
Spent Fuel
Management
|
₹0.25
|
12.5%
|
|
Fuel
Transportation
|
₹0.15
|
7.5%
|
|
Overheads
& Safety Compliance
|
₹0.20
|
10%
|
|
Total
|
₹2.00
|
100%
|
The ₹2 per kWh
figure is a comprehensive estimate covering the entire lifecycle of nuclear
fuel, from procurement and processing to transportation, operation, and waste
management
14.
Conclusion
The Bharat
Small Reactors initiative represents a
transformative step in India’s clean energy strategy, leveraging nuclear
technology to balance economic growth with environmental sustainability. While
the project offers immense potential to decarbonize the grid and enhance energy
security, it faces critical challenges in financial feasibility, regulatory
compliance, and operational implementation. Addressing these hurdles through
cost-sharing frameworks, streamlined regulatory processes, and incentives for
participation can make the initiative more inclusive and viable.
By tackling
these barriers, the BSR project can serve as a benchmark for innovative energy
solutions, aligning India with global climate action goals and bolstering its
leadership in clean energy transitions. A collaborative approach among
stakeholders, including industries, policymakers, and regulators, will be key
to unlocking the full potential of this ambitious endeavour.
