Following the recent news that India and the US have signed an agreement to build six nuclear power plants in India.
Arkapal Sil, Power Analyst at GlobalData, a leading data and analytics company, offers his views on the significance of this decision and what it means for the US and Indian nuclear industries:
“The agreement is aimed to boost the nuclear energy industry in both the countries. In the US, nuclear power industry is saturated and dwindling mainly due to huge project costs as a result of stringent safety standards. In addition, fall in renewable energy prices over the years have made it cheaper and more competitive compared to conventional power in some cases. With only two AP1000 reactors presently under construction – Vogtle Units 3 and 4 – in Waynesboro, Georgia, and the cancellation of two similar units in VC Summer plant in South Carolina, the nuclear projects in India can be a breather for US-based nuclear project developers. Moreover, following the acquisition of Westinghouse Electric Corporation by Brookfield Asset Management Inc. after it filed for bankruptcy and increased push by the US administration to look for overseas projects, the plan to build new nuclear plants will be an opportunity for the US nuclear major to once again ramp up its global operations and achieve financial stability.
“As far as India is concerned, the country aims to reduce coal-based power generation by increasing nuclear power, in an effort to achieve emission reduction with a clean and reliable base load capacity. To this effect India has seven nuclear power reactors with a cumulative capacity of around 5 gigawatt (GW) under various stages of construction. The country aspires for more nuclear power plants to achieve 21GW nuclear capacity by 2030 compared to 6.4GW in 2018. According to GlobalData, the annual nuclear capacity and cumulative nuclear capacity in India is set to increase at a Compound Annual Growth Rate (CAGR) of 9.7% and 10.5% respectively during 2018-2030, while annual coal capacity addition is slated for a negative CAGR of 2% over the same time period. In addition, the NSG waiver granted in 2008 enabling nuclear trade with other countries, led India to envisage for increased nuclear capacity addition as import of advanced technology and fuel from other countries is no longer a hindrance in the path of its nuclear ambitions.
“Collaboration with the US in building nuclear plants can be seen as India’s tactics to avoid overdependence on Russia for its nuclear industry and have a diversified technology portfolio. On the hindsight the move also indicates an indirect check on the increasing Chinese influence in the South-Asian energy market, especially after the Gwadar port in Pakistan became operational in early 2018.”