New Delhi – India's private sector has voiced critical concerns regarding the recently issued draft rules under the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act. The rules, intended to pave the way for private investment in nuclear power generation, contain several ambiguities that industry players are urging the Department of Atomic Energy (DAE) to address before the September 4 deadline for comments.
Major industrial conglomerates, including Jindal Nuclear Power, Adani Group, Tata Power, Reliance, JSW, and Hindalco, have shown interest in establishing captive nuclear power plants. India aims to achieve 100 GW of nuclear power by 2047, a significant leap from the current 8.7 GW.
Key Areas of Contention
Industry stakeholders have highlighted several grey areas within the draft rules that could hinder private participation and investment.
Ambiguous Tariff Mechanisms
One primary concern is the lack of clarity on how tariffs will be determined for nuclear power supplied to distribution utilities, commercial and industrial users, or for captive consumption. While the DAE has indicated a government committee will decide tariffs, industry experts note the absence of a clear Standard Operating Procedure (SOP) akin to the Central Electricity Regulatory Commission (CERC) guidelines for thermal power. This uncertainty makes project cost recovery and financial viability difficult to assess.
Foreign Technology Licensing Hurdles
The draft rules stipulate that foreign nuclear technology designs must be operational and licensed in their country of origin. This requirement poses a significant challenge, particularly for Small Modular Reactors (SMRs), which are largely in the design or experimental phases globally and are only operational in a few countries like Russia and China. Industry players warn this could delay project implementation by several years, as obtaining a license for such technologies might not be possible until well after 2034-35.
Lack of FDI Policy Clarity
Despite ongoing discussions between the DAE and industry regarding foreign direct investment (FDI) in the nuclear sector, the draft rules contain no mention of an FDI policy. This omission creates uncertainty for foreign technology partners and investors looking to contribute capital, which is crucial for reducing overall project costs and securing international expertise.
Absence of Standard Power Purchase Agreements
The absence of standard guidelines for Power Purchase Agreements (PPAs) for nuclear power is another critical issue. Unlike other energy sectors where clear PPA frameworks exist, the lack of such a document for nuclear projects makes it exceedingly difficult for developers to secure debt financing from banks, as PPAs are considered essential bankable documents.
Debate Over Exclusion Zones
Industry has requested a reduction in the mandatory exclusion zone around nuclear reactors, proposing a decrease from 1 km to 500 meters for both smaller (220 MW) and larger (above 700 MW) reactors. While the DAE is reportedly considering this, the current draft defers the decision to project-specific radiation level data submissions, leaving the exact requirements open to interpretation and impacting land acquisition needs.
Industry's Call for Dialogue
While welcoming the SHANTI Act and the move towards private sector involvement, industry leaders emphasize that these critical issues must be clarified to provide a predictable and viable framework for investment. Clear policies on tariffs, technology transfer, FDI, and regulatory zones are essential to attract the necessary capital and expertise to meet India's ambitious nuclear power targets.