8th JANUARY 2019
Answer questions in NOT MORE than 200 words each. Content of the answer is more important than its length.
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GS III: ENERGY/ENVIRONMENT
Q1. What are the various concerns related to the proposed Jaitapur Nuclear Power plant.
- In December 2018, the French company Électricité de France (EDF) submitted a “techno-commercial proposal” to the Indian government for the Jaitapur nuclear power project in Maharashtra. The idea of importing six nuclear European Pressurised Reactors (EPRs) was initiated more than a decade ago, but the project had made little progress due to concerns about the economics and safety of the EPRs, local opposition, and the collapse of the initial French corporate partner, Areva.
- In March 2018, EDF and the Nuclear Power Corporation of India (NPCIL) signed an “industrial way forward” agreement. The urgency is inexplicable as it comes before the techno-commercial offer has been examined and as earlier questions about costs and safety remain unanswered. Moreover, with the Indian power sector facing surplus capacity and a crisis of non-performing assets (NPAs), a large investment in the Jaitapur project is particularly risky.
- It is clear that electricity from the Jaitapur project will be more expensive than many other sources of electricity, including solar and wind power. Across the world, EPRs have experienced delays and cost increases. The first EPR entered commercial operation in December 2018 at the Taishan site in China, five years later than originally projected. Its final capital cost was estimated by industry sources to be “40% over the original estimate”.
- While nuclear costs have been rising, other low-carbon sources of electricity, especially solar energy, have become cheaper. In 2010-11, tariffs for solar photovoltaic (PV) projects under the National Solar Mission were between ₹10.95 and ₹12.76 per unit. But several projects approved under Phase II of the mission have been connected to the grid in the last year with tariffs below ₹5 per unit. In recent auctions for solar PV projects, winning tariff bids in the range of ₹2 to ₹2.50 per unit have become routine.
- The high capital costs of the EPRs are of particular concern because power-generating capacity in India has grown faster than demand causing projects to run into financial difficulties. The government seems to be throwing caution to the winds by investing lakhs of crores in the Jaitapur project. Because the NPCIL’s debts would ultimately be underwritten by the Indian government, if the project encounters financial difficulties, the costs would fall on Indian taxpayers.
- In addition to the high costs, safety problems with the reactor design and construction have emerged in several EPRs. The most serious of these pertained to the pressure vessel, which is the key barrier that prevents the spread of radioactive materials from the reactor. The EPR at Olkiluoto in Finland encountered problems with vibrations in the pipe that connects the primary coolant system with the pressuriser, which maintains the pressure of the water circulating in the reactor.
- These safety concerns are exacerbated by India’s flawed nuclear liability law. If and when completed, Jaitapur “will be the largest nuclear power plant in the world”. In the event of an accident, the nuclear liability law would require the public sector NPCIL to compensate victims and pay for clean-up, while largely absolving EDF of responsibility.
- The Indian law provides NPCIL with a limited opportunity to obtain compensation from EDF for the supply of equipment with defects or sub-standard services. But the joint statement issued in March 2018 promises that the “enforcement of India’s rules” would be in accordance with the international Convention on Supplementary Compensation for nuclear damage, which severely limits the operator’s right of recourse. This raises the disturbing possibility that the NPCIL may have promised not to exercise its right to claim compensation from EDF as allowed by Indian law. In any event, there is a “moral hazard” here: since EDF can escape with limited or no consequences even after a severe accident, it has little material incentive to maintain the highest safety standards, particularly if the requirements of safety come into conflict with the imperative to lower costs. Such pressures might be accentuated by EDF’s poor financial state.