Nuclear Energy in India

Overview, Opportunities, and

Obstacles
Today’s eLunch Presenter

Tyson R. Smith
Partner
+1 415-591-6874
trsmith@winston.com

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Overview
History of India’s Nuclear Program

1948 – Atomic Energy Act

1954 – Established Dept. of Atomic Energy (DAE)

1956 – First research reactor

1963 – Began construction of first commercial nuclear

station
1967 – India announced it would not sign NPT
1973 – First heavy-water reactor
1974 – India tested first atomic weapon
1983 – Established AERB

1940 1950 1960 1970 1980 1990 2000 2010

1974-2008
Primarily indigenous reactors brought online
1946 – Established Atomic
Energy Research Commission
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India’s Nuclear Industry

Civilian Nuclear
Regulator
Operator of Nuclear
Power Plants

Fuel

Uranium

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Stable, Competent Nuclear Regulator

• Hierarchy of requirements • Similar phases/approvals

similar to the U.S. • Environmental
• Published by AERB • Siting
• Addresses topics such as siting, • Construction
design bases, reactor safety, QA, • Excavation
security, etc.
• First pour safety-related concrete
• Erection of major equipment
• Commissioning
• High-quality program
• Reactive (e.g., post-Fukushima)
• IRRS Mission Findings
• AERB independence is next…
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Established Nuclear Power Program

Station
Station Type
Typ Units/MW
Units/MW
e
BWR 2x160
2x160
Tarapur
Tarapu 2x540
r PHWR
PHW 2x540
R 1x100
1x100
Rajasthan PHWR 1x200
Rajastha PHWR 1x200
n 4x220
4x220
Kudankulam
Kudankula VVER-1000
VVER-1000 2x1000
2x1000
m
Kaiga PHWR 4x220
Kaig PHWR 4x220
a
Kakrapar PHWR 2x220
Kakrapa PHWR 2x220
r
Madras PHWR 2x220
Madra PHWR 2x220
s
Narona PHWR 2x220
Naron PHWR 2x220
a

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Sustained International Progress

• In 2008, U.S. and India entered into a Section 123

Agreement under AEA
• Obtained waiver from Nuclear Suppliers Group
(NSG)

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Opportunities
Substantial Need for New (Clean) Energy

• Populous & Growing Installed Capacity (2016) Gigawatts

• 1.3 billion people 200 186

Goal: Close
• 1/6 of global population 150 this gap
• 1.25% population growth
100
• Youthful
50 42.7 42.8
• 50% below age 25 25
5.8
• Brownouts are common 0
Coal Gas Hydro Renewables Nuclear

• “Power for All”

• Double energy capacity by 2019
• Investment potential of >$220 billion in next 4-5 years
• Clean energy?

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At Cusp of Major Nuclear Expansion

• 25% of electricity from nuclear Nuclear Energy Capacity

(GWe)
power by 2050 (currently, 3.5%) 70
63
• Multiple reactors under 60
construction
50
• Market estimated at
$150 billion 40

• About the same as in 30

China
Station Type Units/MW
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Rajasthan Unit 7 & 8 PHWR 2x700 14.6

Kakrapar Unit 3 & 4 PHWR 2x700 10 6.8

2.6 3.8

Madras (Kalpakkam) PFBR 1x500 0

2000 2008 2016 2025 2032

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Already Benefitting from Access to Fuel

natural oxide
TVEL 2009 2000 MT pellets
enriched oxide
TVEL 2009 58 MT pellets
enriched oxide
TVEL 2015 42 MT pellets
natural ore Annual Capacity Factor
KAZ 2009 2100 MT concentrates
(Percent)
3750-7000 natural ore 90
KAZ 2015 MT concentrates 80
70
natural ore 60
AREVA 2008 300 MT concentrates 50

2750-5500 natural ore 40

Cameco 2015 MT concentrates 30
20
10
0
2006 2007 2008 2009 2010 2011 2012 2013 2014

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Significant Foreign Investment Coming?

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 Obstacles Remain,
But Solutions Here (or on the
Way)
Right of Recourse Complicates Liability Law
International Principles Indian Approach

Strict •• Relieving victims of need to • The Civil Liability for Nuclear

provefault
prove faultor
ornegligence
negligence
Liability Damage Act, 2010
•• Ensuring that the operator is the
Exclusive onlyentity
only entityliable
liableto
tocompensate
compensate • Section 6 sets operator’s
fordamage
for damage (even
(even ifif caused
caused by
by a
Liability supplier or vendor)
liability limits
•• Covering
Covering the
the operator’s
operator’s liability
liability
• Section 17 gives operator “right to
Financial •• Ensuring recourse” against supplier
Ensuring funds
funds are
are available
available to
to
compensate victims
compensate victims
Protection • Section 24 provides that supplier’s
•• Limits
Limits in
in time
time and
and amount
amount
•• Enabling liability limited to extent of operator’s
Liability Enabling operator to set
operator to set up
up aa
cost-effective mechanism to
cost-effective mechanism liability
cover the liability amount to
Limits cover the liability amount
• Section 46 channels liability to the
Single
•• Providing consistent treatment of operator
claims in the recognition and
Court
execution
executionof
ofjudgments
judgments • Survived legal challenges

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Strong Gov't Support for Resolving Issues

• Efforts to assuage supplier

concerns
• U.S.-India announce
“breakthrough” on liability
• Ministry of External Affairs
publishes answers to
FAQ
• India ratifies the Convention on
Supplementary Compensation
• Bilateral agreements
• Nuclear Insurance Pool

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Critical Commercial Infrastructure in Place
• 27th global nuclear insurance pool
• 1500 crore rupees (per CLND)
• Approximately $226 million USD
• Policy for operators and suppliers for
third party (public) nuclear liability
• Nuclear Operators Insurance Policy
Tier 1 Operators
• Nuclear Suppliers’ Special Contingency
• First insurance policy for “right of recourse” Tier 2 Turnkey
unveiled by India Nuclear Insurance Pool in Suppliers
August 2016 Other
Tier 3
• Commercial infrastructures now largely in Suppliers
place

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Financing Necessary from Multiple Sources

• Export Credit Agencies

• U.S. Ex-Im Bank negotiating loan for
Westinghouse projects
• But, no quorum to approve loans
• Congress holds keys to resolution
• Other Ex-Im Banks may have role,
too
• Efforts to address NPCIL financial
limitations
• Feb. 2016 law permits NPCIL to enter into JV
with other PSUs
• No private ownership or direct foreign
investment (yet)
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NSG Waiver Sufficient, But India Wants More

• 48-country NSG granted waiver to India in 2008

• India seeking full membership
• Would ensure India’s exports subject to same rules as others engaged
in international nuclear trade
• Filed application to join NSG based on substantial progress, including:
• Civil-military separation
• Safeguards agreements with IAEA
• Adherence to NSG trigger
and dual-use lists
• Would support achievement of
COP-21 objectives
• But, opposed by others,
including China
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Summary
Takeaways

• Established nuclear industry and stable regulatory regime

• Demonstrated need for new nuclear generation
• Increasing energy demand
• Transitioning to “cleaner” energy production
• Strong government support for new nuclear
• Steady progress since 2008
• Creating appropriate conditions for making investment decisions
• Regulatory and commercial infrastructure in place
• International agreements
• Liability and insurance issues on path to resolution

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Thank You.

Tyson R. Smith
Partner
+1 415-591-6874
trsmith@winston.com

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