Bharat remains on a Modi-fied trajectory towards the vision of Viksit Bharat 2047, with a historic third mandate won by Prime Minister Narendra Modi. On this trajectory, keeping a stable and balanced economy has been pivotal, and with Budget 2024, the Government has tried doing so again.
On July 23, Finance Minister Nirmala Sitharaman presented the first budget of the Modi 3.0 Government. Key highlights included an increased standard deduction and revised tax rates for salaried individuals under the new tax regime. Additionally, reductions in customs duty on gold, silver, mobile phones, and other goods were announced. The Centre’s capital expenditure for FY25 remains at RS 11.1 lakh crore, with infrastructure spending projected at 3.4 per cent of GDP. What was as noteworthy, if not more, was a renewed commitment to sustainable energy security. In an ambitious move to enhance the nation’s energy security and sustainability, the Government of India has unveiled plans to engage the private sector in the establishment of small nuclear reactors. This initiative, announced in the 2024 budget, marks a significant shift in the country’s approach to nuclear energy, traditionally dominated by state-run enterprises.
As per the International Atomic Energy Agency (IAEA), the small modular reactors (SMRs) are advanced nuclear reactors with a power generation capacity ranging from less than 30 MWe to 300+ MWe. These reactors are a fraction of a conventional reactor in size and are composed of modular parts that can be assembled on-site. Governments, regulators, and companies are advancing the deployment of Small Modular Reactors (SMRs), with nearly 80 designs under development or in operation around the world. These include land-based water-cooled SMRs using Light Water Reactors (LWR) and Pressurised Heavy Water Reactors (PHWR), marine-based SMRs, high-temperature gas-cooled reactors (HTGRs), liquid metal-cooled reactors (LMFRs), molten salt reactors (MSRs), and microreactors (MRs). Notable milestones include the operational Akademik Lomonosov in Russia and the HTR-PM demonstration in China.
The decision of the Indian Government aligns with the global trend of adopting smaller, modular nuclear reactors, which offer several advantages over traditional large-scale reactors. Achieving faster decarbonisation in the power sector is crucial, with electrification of end-use sectors being key for reducing emissions. As global economies target net-zero emissions by 2050, electricity demand is expected to more than double. The power sector, responsible for 40 per cent of global energy-related emissions, needs significant investment in low-carbon generation and grid infrastructure. Nuclear power can play a critical role in this energy transition by providing reliable, continuous base load capacity and supporting grid stability alongside variable renewable energy sources.
According to the IEA, nuclear energy supply is projected to increase significantly, rising by 40 per cent by 2030 and more than doubling by 2050 compared to 2020 levels. The small modular reactors (SMRs) are more flexible in terms of location and can be deployed in regions where larger plants would be impractical. Additionally, SMRs promise enhanced safety features, lower initial capital investment, and reduced construction times, making them a viable alternative for increasing nuclear capacity. Small Modular Reactors offer a range of compelling economic and technological benefits that position them as a viable alternative to traditional nuclear power plants. Economically, SMRs require significantly lower upfront capital investment, with estimates suggesting that they can achieve construction costs that are 20-30 per cent lower per megawatt compared to large reactors, which typically exceed 1,000 megawatts (MW) in capacity. This reduction is largely due to their modular design, allowing for factory production and assembly, which can cut deployment times from up to 12 years for conventional plants to as little as three years for SMRs. Furthermore, SMRs can generate about 7.2 million kilowatt-hours per day, making them suitable for diverse applications, including industrial heat and hydrogen production, while occupying less land—approximately 10 acres for a 470 MW SMR versus 832 acres for a median-sized U.S. nuclear plant, which translates to a land efficiency of 47 MW per acre for SMRs compared to just 1.2 MW per acre for larger plants. In its report on `The Role of Small Modular Reactors in the Energy Transition’, the Niti Aayog said
“As many SMR designs were under various stages of research, development, and licensing in different countries, global regulatory harmonisation, developing the manufacturing ecosystem, and bringing in public as well as private capital would be the key for growth of the SMR industry.”
Technologically, SMRs incorporate advanced safety features, including passive cooling systems that enhance operational safety and reduce the frequency of refuelling, which occurs every 3-7 years compared to 1-2 years for larger reactors. This not only minimises the risks associated with fuel transport but also allows for a more streamlined operational process.
As of early 2024, there are over 80 SMR designs under development globally, with the potential to add up to 21 gigawatts of capacity by 2035, representing approximately 3 per cent of the total installed nuclear capacity. The flexibility of SMRs in site selection and their ability to integrate with renewable energy sources further bolster their appeal, enabling them to support grid stability in systems with high shares of intermittent renewables. Overall, the combination of lower costs, quicker deployment, enhanced safety, and operational flexibility positions SMRs as a key player in the transition to a low-carbon energy future. A Techno-Economic Assessment (TEA) for SMR technology must consider several key factors. These include the potential for emission-free electricity generation, operational flexibility, and the ability to provide heat for various applications. It should also evaluate technology readiness, design challenges, R&D investment needs, regulatory review status, licensing costs and timelines, intrinsic safety, design simplicity, and the Levelised Cost of Electricity (LCOE). Additionally, the assessment should examine cost advantages, competitiveness, fleet deployment, export potential, international licensing harmonisation challenges, supply chain constraints, and necessary changes to existing nuclear infrastructure. SMRs can be deployed on new or existing power plant sites, with existing sites offering advantages such as rail connectivity, land and water availability, and established infrastructure. For light-water PWR-based SMRs using Uranium Oxide fuel, existing regulatory frameworks can likely be applied, with waste management similar to large LWRs. Non-LWR SMRs, such as LMFR, HTGR, and MSR designs, may require new fuel types and fabrication facilities, necessitating redesigned casks, additional R&D, and updated regulatory provisions. SMR developers must consider the unique waste forms and management requirements in their designs and planning.
India’s energy demands are on a continuous rise, driven by rapid industrialisation and a growing population. To meet this demand while also adhering to international commitments to reduce carbon emissions, the Government is exploring diverse energy sources. By involving private entities, the Government aims to leverage technological innovations, operational efficiencies, and financial investments that private companies can bring to the table. Financing is a major hurdle for SMR development and deployment due to uncertainties in costs and limited private investment. The high investment costs, safety concerns, long construction periods, and nuclear waste management issues deter private sector involvement. Government support for R&D and initial funding is crucial to build confidence for large-scale SMR deployment. While conventional nuclear projects have heavily relied on Government backing, constrained budgets now necessitate private capital to drive growth. To attract private investment, governments should adopt project financing models and de-risking strategies. Political support, a conducive regulatory framework, a mature nuclear supply chain, proof of concept, clear liability frameworks, and effective energy policies are essential. Family offices can provide early-stage, risk-tolerant capital, though not sufficient alone. EPC companies could significantly contribute to later-stage development through equity partnerships, offering design, manufacturing, and construction services, thus sharing the risk and aiding commercialisation. Private sector participation is expected to accelerate the development and deployment of these reactors, facilitating quicker adaptation to emerging technologies and practices. Moreover, this collaboration could lead to the creation of new job opportunities and skill development in the high-tech nuclear sector. As India embarks on this new path, the success of integrating small nuclear reactors into the national grid will depend on effective policy implementation, regulatory oversight, and sustained collaboration between the public and private sectors. The SMR industry faces challenges due to the diverse range of designs and capacities, which complicate regulatory approval and cost optimisation. To progress, the industry needs to standardise designs, improve Technology Readiness Levels, and develop large-scale manufacturing capabilities. Overcoming hurdles like securing funding, harmonising regulations, and ensuring the availability of specialised materials and skilled personnel is essential. Strategic partnerships among governments, private companies, and academic institutions will drive technology development and deployment. Establishing an SMR ecosystem and securing private investment through innovative financing methods will be crucial for achieving long-term net-zero goals and expanding the nuclear energy share. Regardless, the initiative by the Indian Government represents a pivotal moment in India’s energy journey, with the potential to set a precedent for other developing nations seeking sustainable energy solutions.
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