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Straight Talk

The Promise of Power

Nuclear power has been projected as the energy on
which future growth will depend. But, it's neither
feasible nor desirable...

By Anand Tandon | Mar 29, 2013

Earlier this month, I had the opportunity to attend the book launch
of "The Power of Promise" by MV Ramana. The book discusses
Nuclear Energy in India and its outlook – a subject that needs
greater public debate. In the context of an energy deficient India,
nuclear power has often been projected as the panacea, the energy
fount on which future growth of the economy will depend. The case
for nuclear power is based on two major argument (a) it is cheap (b)
it is non polluting and abundant.
Marshalling rare facts from a
secretive nuclear establishment,
Ramana argues that nuclear power
as a major source of India's energy
plan is neither feasible nor desirable.

Nuclear power: more expensive
than coal

In 2003, an interdisciplinary study
by researchers at MIT came to the
conclusion "In deregulated markets, nuclear power is not now cost
competitive with coal and natural gas". This study was updated in
2009. The conclusion remains: "the prospects for nuclear energy as
an option are limited, the report finds, by four unresolved
problems: high relative costs; perceived adverse safety,
environmental, and health effects; potential security risks
stemming from proliferation; and unresolved challenges in
long-term management of nuclear wastes."

Ramana's conclusion is similar. He compares cost of power
generated from coal to that generated from nuclear plant – using
assumptions that are grossly in favour of the nuclear alternative. He
assumes that coal fired generators last a decade less than nuclear
reactors, have to pay more for fly-ash disposal (they don't).

Simultaneously, the radioactive waste disposal in nuclear power
plants is supposed to cost only 2 paise per unit (it will likely cost a
lot more). Additionally, he assumes that coal travels 1,400 kms to
reach the power plant (over 33 per cent of coal fired generators are
either at the pit head or increasingly near ports where the coal can
be imported). Despite all these assumptions, at any cost of capital
over 4 per cent, coal based power generators are cheaper than the
nuclear alternative on the basis of levelised tariffs.

Safety: a significant concern

None of the above factors in the cost that needs to be paid for
security, and potential health issues. It is pertinent to note the
response of various government departments with regard to
preparedness in case of nuclear accidents. While reacting to the
Parliamentary standing committee discussing the nuclear liability
bill, the ministry of water resources remarked "The Secretary, water
resources, was of the opinion that any nuclear incident may induce
radioactive contaminations in surface, ground water bodies, and
other water resources. However, he stated that the Ministry does
not have any facility for testing water quality".

The Secretary, Ministry of Health and Family Welfare while
deposing before the Committee mentioned that her Ministry is
"nowhere (ready) to meet an eventuality that may arise out of
nuclear and radiological emergencies." She further mentioned that
while drafting the Bill the Department of Atomic Energy did not
consult them. She added: "Since the response system to deal with
any kind of emergency of such type, the hospitals are not
well-equipped, it is natural that mortality and morbidity due to
multiple burn, blasts, radiation injuries and psycho-social impact
could be on very high scale and medical tackling of such a large
emergency could have enough repercussions in the nearby areas of
radioactive fall out."

Proponents of nuclear power maintain that the likelihood of a
nuclear accident remains remote – not so. Incidents like the recent
accident in Japan illustrate that the best systems are prone to
failure and in a densely-populated country like India, can lead to
disastrous consequences. As Ramana pointed out in his speech – if
the manufacturers are really so confident of their equipment being
safe, why are they insisting on shielding themselves from nuclear
liability – clearly there remain a real and non-trivial risk of nuclear
disaster.

Is the DAE plan feasible?

In 1964, Bhabha stated "There is little doubt that before the end of
the century, atomic energy will be producing a substantial part of
the power in India, and therefore practically all the addition to our
power generation will come from it at that time". In 1972, Homi
Sethna, chairman AEC, predicted that India would have 43GW of
nuclear generating capacity by 2000. In reality, in 2000, India had
2.7GW.

In September 2009, the PM stated that India will have 470 GW of
nuclear power capacity by 2050. To put this in perspective, out of
the total generation of over 200GW in India, less than 5GW is
currently nuclear. Can we really expect almost a 100 fold increase in
nuclear power generation capacity over the next 40 years?
India's plan for rapid growth of nuclear power is contingent on
using fast breeder reactors (FBR). FBR's generate plutonium and
are supposed to provide fuel for the next reactor – a sort of chain
reaction allowing unlimited amounts of fuel! However, Ramana's
analysis reveals that when adjusted for the time taken for a reactor
to generate enough fuel to power up the next, the theoretical rate at
which reactors can be built, reduces by 60 per cent of what the DAE
estimates. In other words, "a fast growth of breeder reactors is not
even theoretically, let alone practically, achievable."

Rosier in the future

As with many government estimates, the future seems rosier than
history would suggest. A recent example is the criticism that the
government's economic mandarins are reserving for CSO's advance
GDP growth estimate of 5 per cent for 2012-13. Responding to the
CSO's decade low figures, the Deputy Chairman of the Planning
Commission reacted "I think it (growth projection of 5 per cent in
2012-13) is very low. I have been told that CSO has taken data from
April to November (2012-13) and they just projected it (advance
estimates)". Hasseb Drabu's comment is worth noting - "The
sources and methodology adopted by the CSO are laid out by the
System of National Accounts 2008, the latest version of the
international statistical standard for national accounts, adopted by
the United Nations Statistical Commission (UNSC). ...In this
context, it will be enlightening to know which system of national
accounts in the world is not based on past data. Also, what other
data can official national accounts possibly be based on?"
There cannot be a better time to warn of rosy projections based on
views, not data, as we enter the Budget Session. As investors, we
need to keep assumption firmly rooted to reality. And yes, India's
quest for renewable energy needs to be strongly focussed on the
solar option – where paradoxically, the government plans to impose
an additional import duty!