Private sector investment essential for SMR deployment, Indian think-tank says

Thursday, 18 May 2023

The National Institution for Transforming India (NITI Aayog) co-authored the document, A Report on the role of small modular reactors in the energy transition, with India's Department of Atomic Energy (DAE) and integrated engineering consultant Tata Consulting Engineers Limited (TCE). The report was released at the International Seminar on the Role of Small Modular Reactors in the Energy Transition, part of the 3rd Energy Transitions Working Group held in Mumbai from 16-17 May under India's G20 presidency.

"As the world transitions towards sustainable energy, harnessing potential of nuclear power through Small Modular Reactors (SMRs) can pave the way for a cleaner and brighter future. By prioritising research and development in this sector, the global community can help address vital issues such as climate change and energy security. SMRs offer a flexible solution for meeting energy needs," India's G20 Sherpa Amitabh Kant said in a message published in the report. "Release of this report during India's G20 presidency can enable fruitful dialogue on SMRs and contribute towards global efforts to build a sustainable and resilient energy system for all with greater participation of private players."

The 106-page report looks at the role of SMRs in the energy transition, the status of technology development, readiness of supply chains, initiatives to harmonise SMR regulation and the international licensing process, and preparation for international safeguards, as well as the need to de-risk SMR projects to attract investment from private players.

The SMR industry is currently at an "evolution stage" as it faces the challenges of technology demonstration, special material availability, special manufacturing techniques, project funding requirements and regulatory harmonisation, the report says, but these challenges - and the need for SMRs to help reach net-zero goals - mean it is "essential" to establish an "SMR ecosystem".

Standardisation of designs, components and modules will facilitate large-scale adoption of SMRs, and existing safety assessment methodology can be updated for the concept of multi-module designs and emergency planning zones of SMRs, it finds, but financing "remains one of the critical challenges against accelerated development and deployment of SMRs". A high degree of uncertainty in SMR costs - which is to be expected in first-of-a-kind plants, which are also likely to see only partial benefits from modularisation and standardisation compared with later plants - means there is limited private investment in the sector.

Attracting private sector financing for SMRs will be hard without initial support from government, the report notes, but low-cost finance, green finance and incorporation of nuclear into green taxonomies can improve the economics of SMR projects. De-risking SMR projects and establishing attractive financing frameworks is "pivotal" for incentivising private investors, it says. "It has been observed that venture capital is a poor fit for the 'hard' SMR sector. Hence, the public and private sectors must work together to identify alternative sources of early-stage finance."

India's 22 operable nuclear power plants currently generate only about 3% of the country's electricity needs, but the country has confirmed plans for 21 new reactors (including 8 under construction and one - Kakrapar 3 - which has been grid-connected but is not yet in commercial operation).

NITI Aayog has previously said the government should consider SMRs in addition to these plants to help the country reach its energy needs and net-zero goals, and in 2022 Minister of State Jitendra Singh called for the country's private sector companies and start-ups to take part in the development of SMR technology at a workshop held by the think-tank. However, India's 1962 Atomic Energy Act prohibits private control of nuclear power generation and although the act was amended in 2016 to allow Nuclear Power Corporation of India Ltd to form joint venture companies with other Indian public sector units, this does not extend to private sector companies, nor does it allow direct foreign investment in nuclear power, apart from the supply chain.