Posts Tagged ‘economics’

Nuclear Power Subsidies: The Gift that Keeps on Taking

February 1, 2011 Leave a comment

Report from the Union of Concerned Scientists

Link to pdf of Report

Government subsidies to the nuclear power industry over the past fifty years have been so large in proportion to the value of the energy produced that in some cases it would have cost taxpayers less to simply buy kilowatts on the open market and give them away, according to a February 2011 report by the Union of Concerned Scientists.

The report, Nuclear Power: Still Not Viable without Subsidies, looks at the economic impacts and policy implications of subsidies to the nuclear power industry—past, present, and proposed.

How would you like your subsidy?

Nuclear power subsidies vary by type of ownership (public or private), time frame of support (legacy, ongoing, or new), and the type of cost (or “attribute of production”) they address—from startup capital to decommissioning and waste disposal. Subsidies can take many forms, including tax breaks, accident liability caps, direct payments, and loan guarantees.

While the exact value of these subsidies can be difficult to pin down, even conservative estimates add up to a substantial percentage of the value of the power nuclear plants produce—approaching or even exceeding 100 percent in the case of legacy subsidies and subsidies to new privately-owned reactors

Subsidies prove addictive

Subsidies were originally intended to provide temporary support for the fledgling nuclear power industry, but the promised day when the industry could prosper without them and power from nuclear reactors would be “too cheap to meter” has yet to arrive. It is unlikely to arrive any time soon, as cost estimates for new reactors continue to escalate and the nuclear power lobby demands even more support from taxpayers. Piling new subsidies on top of existing ones will provide the industry with little incentive to rework its business model to internalize its considerable costs and risks.

Nuclear subsidies effectively separate risk from reward, shifting the burden of possible losses onto the public and encouraging speculative investment. By masking the true cost of nuclear power, subsidies also allow the industry to exaggerate its economic competitiveness; consequently, they diminish or delay support for more economical and less risky alternatives like energy efficiency and renewable energy.

The report concludes with a dozen recommendations for policymakers, including reducing subsidies to existing reactors, adopting market-oriented approaches to uranium mining royalties and waste management financing, and incorporating the costs of preventing nuclear proliferation and terrorism into economic assessments of new reactors.

Nuclear Power Corp to raise Rs15,000 crore debt

October 15, 2009 Leave a comment

G Seetharaman in DNA

October 15, 2009

State-owned Nuclear Power Corporation of India (NPCIL) expects to tie up Rs15,000 crore debt for its Jaitapur nuclear power plant by April-June, its director of finance J K Ghai said.

The amount is part of the debt for the first two units of the European Pressurised Reactor (EPR) to be set up at Jaitapur in Ratnagiri district of Maharashtra.

Ghai said, “We are in talks with top French banks such as BNP Paribas, Societe Generale, Calyon, Natixis and also HSBC, and we are hopeful of completing the process in 6-8 months.”

NCPIL signed an agreement with French nuclear power major Areva SA in February for the setting up of six EPR units with a combined capacity of 10,000 megawatt. The units will be set up in pairs. The first two units will have a capacity of 1,650 mw each.

Ghai said the final cost of the project is being worked out. “But assuming the cost per megawatt to be Rs10 crore because the reactors are imported, the total project cost should be Rs1 lakh crore,” he said at the sidelines of a conference.

NPCIL is looking at a debt-equity ratio of 70:30 for the project. The cost per mw using indigenous technology is about Rs6.5-7 crore.

“If the first two units cost Rs33,000 crore, then out of the debt component of Rs23,000 crore, we will raise about Rs15,000 crore through external commercial borrowings and export credit agencies. The remaining Rs8,000 crore will be raised in the domestic market or through a combination of domestic and overseas sources,” Ghai said.

He said that the interest rate should be in the range of 5.5-6.5% and the repayment period 25 years. NPCIL is also in talks with Coface, a receivables management firm, the equivalent of Exim Bank for the European Union.

SK Jain, chairman & managing director, NPCIL, said the firm should begin work on the first twin units by the end of next year or beginning of 2011. The subsequent twin units will be set up after a gap of three-and-a-half years. All the six units are expected to be commissioned in 12-15 years.

He said the government will begin handing over the 938 hectares of land for the project on Thursday and NCPIL expects to get possession of all of it by year-end.

India has an installed nuclear power capacity of 4,120 mw and targets a capacity of 63,000 mw by 2030 and 4,70,000 mw by 2050

Areva offers India stakes in Uranium mines

June 6, 2009 Leave a comment

From Bloomberg via Times of India

June 6, 2009

Areva SA, the world’s biggest maker of atomic reactors, has offered India stakes in African uranium mines to ensure supplies for fuel-starved plants, the head of the nation’s monopoly nuclear generator said. State-run Nuclear Power Corp of India is considering investing in as many as four mines, including projects in South Africa and Nigeria, chairman Shreyans Kumar Jain said.

Patricia Marie, a spokeswoman for Areva in Paris, didn’t immediately comment when contacted. “Some of the mines that we have been offered stakes in are already producing and some have yet to be developed,” Jain said. “We may invest up to 26% of the project cost,” he said, declining to give more details about the mines or how much the company would spend on the proposed acquisitions.

Nuclear Power is also seeking long-term supply contracts from Kazakhstan, Canada and Brazil as it orders reactors worth at least $14 billion from overseas, Jain said. India needs to invest in uranium assets to ensure fuel for a planned 14-fold increase in nuclear generation capacity by 2030 after a three- decade ban on supplies to the country was lifted last year.

Australia, home to the world’s biggest-known uranium reserves, has refused to sell the fuel to the country because it hasn’t signed the Nuclear Non-Proliferation Treaty. Buying shares in Areva’s mines will help boost supplies for locally built atomic plants as domestic reserves of uranium are insufficient for India’s requirements, Jain said on Thursday.

Nuclear Power may spend more than a planned $1.2 billion to buy equity in overseas uranium mines, including those in Russia and Kazakhastan, he said. Uranium Supply Areva, which is building the first large-capacity atomic project in India with overseas equipment, will also supply uranium to run the reactors for 60 years, chairperson Anne Lauvergeon said in February after signing a preliminary sales agreement.

Nuclear Power will buy two Areva reactors of 1,650-megawatt capacity each and may increase the number to six, according to the preliminary agreement. The project will be built at Jaitapur in the western state of Maharashtra and Nuclear Power may complete acquiring almost 1,000 hectares of land for it in the “next few months,” Jain said.

The two companies are waiting for France’s parliament to approve an inter-governmental agreement before raising 3 billion euros ($4.2 billion) for the project, he said. A final accord may be signed next year after obtaining French parliamentary and regulatory approvals, Jain said.

Money no object for Indian reactor plans

March 25, 2009 Leave a comment

From the World Nuclear News

March 25, 2009

Plans to deploy new reactors in India look strong after key officials indicated the funds required were forthcoming.

Nuclear Power Corporation of India Ltd (NPCIL) and Areva have a memorandum of understanding to work towards an EPR-based nuclear power plant at Jaitapur, with two 1600 MWe reactors as a starting point but potential to expand to eight. The maximum total capacity of 9600 MWe would place Jaitapur ahead of any other nuclear facility in terms of power production.

NPCIL chair S K Jain said in a telephone interview with Bloomberg that the company had invited foreign banks to express their interest in the project. Fifteen international finance institutions including ten from France responded, said Jain, adding, “Our expression was for €3 billion but we have got commitments for €8 billion.”

Kumar elaborated that debt was to fund 70% of the project with the remainder coming from NPCIL’s cash reserved of 110 billion rupees ($2.1 billion).

The project with Areva is just one of a massive program of nuclear build planned in India. Nuclear trade restrictions on India were lifted last year and delegation after delegation of foreign firms has visited since then. The business is mutually beneficial: Global reactor firms want to sell their wares, while Indian manufacturers want to win contracts to supply reactor components internationally. India itself, through NPCIL, wants to secure its electricity supplies with new reactors and long-term contracts for uranium fuel.

Most recently, GE Hitachi signed agreements with NPCIL as well as Bharat Heavy Electricals for the manufacture and construction of its Advanced Boiling Water Reactor.

Atomic Energy of Canada Ltd has also agreed to team up with Larsen & Toubro (L&T) for analyses of its ACR-1000 power reactor in the Indian context. L&T has also signed a memorandum towards a major role in the manufacture of components and modules for Westinghouse’s AP1000.

Already present in the Indian market under special agreements, the Russian nuclear industry will be providing two more of its VVER-1000 units at Kudankulam.

US nuke team pushes for firm commitment on project sites

January 13, 2009 Leave a comment

From The Hindu Businessline

January 13, 2009

In the scramble to grab a piece of the estimated $150 billion worth of equipment orders on offer in India’s newly-opened nuclear market, US players are trying hard to make up for lost ground.

With the Russians and the French getting a head start in securing new business opportunities in the Indian nuclear market, a visiting US-India Business Council (USIBC) nuclear delegation, led by GE-Hitachi Nuclear and Westinghouse Electric and with certification from the US Department of Commerce, plans to extract a firm commitment from India on specific sites to be earmarked for atomic power stations to be built by US firms.

“We are certainly expecting some clarity on the sites that are to be earmarked for US participation. As matters stand now, we are currently only a distant third to the Russians and the French… and we are concerned about new sites getting cherry picked…,” the USIBC’s Director, Mr Ted Jones, told Business Line.

The Indian government had earlier provided the US with a Letter of Intent stating its intention to purchase reactors with at least 10,000 MWe worth of new power generation capacity from US firms and had tentatively committed to earmark at least two sites for American participation. The visiting US nuclear delegation, which is being touted as its largest ever trade mission to Delhi and Mumbai, includes over 50 executives representing around 34 US commercial nuclear firms, including GE-Hitachi, Westinghouse, Bechtel Nuclear, The Shaw Group, CH2M Hill, Babcock & Wilcox, Uranium One, Thorium Power and USEC. The delegation is set to meet with the top brass of State-owned Nuclear Power Corporation of India Ltd (NPCIL) on January 15.

France’s Areva SA and Russia’s Rosatom Corporation have got a head start on Indian orders after the 45-nation Nuclear Suppliers Group lifted the ban on September 6 last year. While the Russians, who are currently in advanced stages of setting up two 1000 MWe nuclear units at Koodankulam site in Tamil Nadu, are on course to set up another four units at the same location, the French have inked a fuel pact with India and are likely to be offered the Jaitapur site in Maharashtra for Areva’s EPR Pressurised Water Reactors.

India hopes to place orders for nuclear equipment worth an estimated $14 billion by the end of 2009 in the first set of tenders for new Light Water Reactors (LWRs) on the anvil. As a step in this direction, NPCIL had short-listed GE and Toshiba Corporation’s Westinghouse Electric Company, along with Areva and Rosatom, for these orders. Earlier, the Department of Atomic Energy had tentatively identified five coastal sites where imported LWR clusters could come up.

“In recent decades, US reactor companies and civil nuclear engineering companies have remained at the forefront of innovation and engineering worldwide. US industry, including many of the commercial nuclear suppliers on this Mission, provided massive political support for the US-India civilian nuclear initiative,” Mr Jones said.

One of the reasons for the US players delaying their entry into the Indian nuclear market is they have been holding out for India to draft and ratify a domestic law consistent with the International Atomic Energy Agency’s (IAEA) Convention on Supplementary Compensation for Nuclear Damage, in order to limit liabilities for the reactor vendors in case of an accident or mishap.

The convention, among its provisions, places the onus of compensation in case of nuclear damage on the ‘Installation State’ (where the nuclear facilities are located), in this case India. The US nuclear industry, which comprises entirely private firms, has been insisting that they need the liabilities framework as an enabling provision before they enter the Indian market unlike the Russian and French players, which are mostly State-owned firms with sovereign guarantee.

MNCs rush for N-deals with NPCIL

August 11, 2006 Leave a comment

From The Economic Times

August 11, 2006

KOLKATA: The Americans, the French, and the Russians have initiated talks with Nuclear Power Corporation of India (NPCIL) over the possibility of grabbing nuclear power projects in India since the Indo-US nuclear deal was signed.

“Considerable interest has been shown by companies from developed countries to contribute to the Indian nuclear power programme, including French nuclear power major Areva NP, Atlanta-based General Electric (GE) and Russian nuclear plant manufacturer Atomstroyexport.

All have signed contracts with NPCIL over the possibility of erecting nuclear plants in India and talks are at the pre-project stage,” a director at NPCIL told ET.

“The Indian government has recently cleared four new sites for setting up nuclear power stations. Sites cleared are at Kudankulam in Tamil Nadu, Kakrapar in Gujarat, Rawatbhata in Rajasthan, and Jaitapur in Maharashtra. The foreign nuclear power companies are eyeing projects there. Additionally, they are also looking at capacity addition plans that have been lined up,” he said.

“All these companies have entered into preliminary talks with us. To this effect, they have also made presentations on the broad contours of the projects they may be interested in,” he added.

An NPCIL official said that Areva may be eyeing a project at Jaitapur in Maharashtra. One of these companies may also be awarded a project in West Bengal where NPCIL is currently looking at a suitable location for setting up a nuclear power plant.

Areva is a 10bn euro in size and has some times back set up a nuclear power plant in China. Asia-Pacific accounted for 12% of Areva’s sales in ‘05. It is into design and construction of nuclear power plants and research reactors, instrumentation and control, modernisation and maintenance services, components manufacture and the supply of nuclear fuel.

Atomstroyexport, has erected a number of plants in as many as 15 countries, including India. The latest projects include construction of two power units (2000 MW total) in China and one power unit of 1000 MW in Iran. It may be interested in the next stages of expansion at Kudankulam in Tamil Nadu where they are already building two 1,000 MW reactors.

The nuclear power division of the $149bn GE group had approached NPCIL. The division is into nuclear fuel manufacturing, reactor servicing, performance service and new nuclear projects.

“NPCIL will obviously look for the best technology partner among the interested parties. The idea is to localise the new technology that would be adopted in the long run. One or two plants may be erected with imported technology which would later be indigenised as and when we are able to absorb the technologies,” he said.

“The Indian nuclear power sector has exhibited competencies and we have the technical capabilities to adopt and successfully implement these technologies. There are examples in Rajasthan where we have adopted foreign technologies,” the official said.

India on power trip as nuke deal advances

June 9, 2006 Leave a comment

By Siddharth Srivastava in Asia Times

Jun 29, 2006

The Indian nuclear deal cleared a major hurdle this week, with a US congressional panel endorsing the pact to share civilian nuclear technology with the South Asian nation.

The 37-5 vote in the House of Representatives’ International Relations Committee was for enactment of laws to exempt India from US rules that contain nuclear exchanges with countries that have not abided by the international order on the issue.

India developed its nuclear-weapons program outside the Non-Proliferation Treaty (NPT), which it has refused to sign because of perceived bias in favor of countries that possess atomic bombs.

In a crucial step toward approval of the deal, the committee carried several amendments but rejected three by large majorities, including one that called for India to sign the NPT.

Despite the development, there is still a way to go. The deal was to go to the Senate Foreign Relations Committee on Wednesday, and reports suggest that, as in the House, this will translate into amendments in the language or rephrasing of a bill, after incorporating the views of all the members, without changing the essential spirit of the landmark agreement. The full House and Senate would also have to approve legislation and then reconcile differences between their bills.

The legislation is likely to add more substance to ensure that India remains committed to implementing strong export controls, separating its civilian nuclear infrastructure from its weapons program and placing civilian facilities under International Atomic Energy Agency (IAEA) safeguards.

The Times of India said, “The solidity of the House vote is being seen as an assurance that the Bush administration had lined up enough bipartisan support to get the deal past the barricades erected by non-proliferation hardliners, many of them suspected to be working at the instance of Islamabad or Beijing.”

New Delhi, for its part, is leaving no stone unturned to ensure that nuclear power is factored into the rising energy requirements of a growing Indian economy. Reports suggest that Washington and New Delhi are also working toward ensuring a statement in support of the deal at next month’s meeting of the Group of Eight (G8) most industrialized nations in St Petersburg. This could build pressure on the Nuclear Suppliers Group (NSG) as well as cajole the hawks at the US Congress. The 45-nation NSG has made it clear it will await the Congress vote before making its own decision.

Tapping the G8 is a clever move, as the grouping does not include China, which is likely to be the main stumbling block at the NSG. Russia, France and Britain have openly supported the deal; New Delhi has been lobbying hard with Japan, Canada and Germany, which are now much more amenable. Italy, under a new left-leaning government, could cause problems, but is not likely to be as vehement as Beijing.

Getting India’s house in order
However, regardless of what the US Congress thinks, India is going to make a big push for nuclear energy and reduce reliance on the very expensive fossil fuels. (India imports 70% of its crude-oil requirements.)

There is the fear that the nuclear pact will be delayed because of congressional preoccupation with domestic issues and elections this autumn. While launching an international bid, India is trying to ensure that its own house is in order.

The Indian government has drawn up an ambitious bid to garner 60 million tonnes per annum of equity oil from overseas by 2025 by empowering public-sector oil companies to enter exploration and production business abroad.

Last month, New Delhi announced that plans were being chalked up to double electricity production from nuclear power plants by 2030 with the possibility of international cooperation.

“We are trying to realize the target of 20,000 megawatts and scale it up to 40,000MW by 2030,” said Anil Kakodkar, chairman of the government-controlled Atomic Energy Commission.

At the current level of 3,310MW, nuclear energy constitutes only 3% of the installed capacity in the country.

Recently, India’s 16th nuclear plant went critical at Tarapur, while sites have been cleared by the government for four 700MW nuclear power plants (two each) at Kakrapar in Gujarat and Rawatbhata in Rajasthan. Once the 540MW Tarapur plant (the second pressurized heavy-water reactor) is synchronized to the western grid, the total installed capacity of nuclear energy will go up to 3,890MW. Pre-project work has begun at sites in Jaitapur and Kudankulam for four 1,000MW light-water reactors.

To provide nuclear power to eastern India, the government has in principle approved a 2,000MW plant in the impoverished state of Bihar. The Uranium Corporation of India Ltd is looking to increase domestic production of nuclear fuel in the states of Jharkhand, Andhra Pradesh, Meghalaya, Rajasthan, Chhattisgarh and Karnataka.

India’s Nuclear Power Corp of India (NPCIL) has announced plans to spend US$1.2 billion on a stake in a uranium mine, taking on competition from China (India’s main bugbear in oil auctions) and Japan. In an interview with Bloomberg News, NPCIL chairman S K Jain said recently that India had approached Australian and Canadian companies on a possible joint venture in uranium mining.

New Delhi is also working on amending the Atomic Energy Act (AEA) to allow private participation in nuclear-power production that has so far been the fief of only government agencies. Many private players including Reliance, Tata and US-based General Electric (GE) have expressed interest in building nuclear plants.

“We are working on moving forward to broadening of the [Atomic Energy] Act,” Kakodkar said recently.

Reliance Energy Ltd (REL) has approached the NPCIL with a proposal to set up nuclear-energy-based power projects. REL said possible nuclear cooperation between India and the US has opened new doors. Anil Ambani, chairman of REL, said the company is exploring the possibility of setting up a 2,000MW nuclear power plant. REL is already in talks with GE and Russia-based Atom Story Export (ASE) for possible joint ventures.

Indian industry is also expecting contracts of more than $600 million from the International Thermonuclear Experimental Reactor (ITER) project, a joint international effort to demonstrate the feasibility of fusion reactions for commercial power generation.

Experts say that to meet the revised targets, India will have to build at least 30 more reactors and spend more than $40 billion in the international market. The US estimates that overall business worth more than $100 billion can be generated if the Indian nuclear deal goes through, with companies such as France’s Areva SA, Electricite de France and the United States’ GE and Westinghouse Electric Co as well as ASE benefiting immensely.

More than $200 billion may be spent on the plants worldwide by 2030, according to the International Energy Agency in Paris.

In this context and in keeping with the realities, the Indian Embassy in Washington has signed for more than $1 million two lobbying firms to “sell the deal” to the US Congress. Last month Foreign Secretary Shyam Saran met with US Under Secretary of State Nicholas Burns in London to review the agreement.

In a major boost to India, the head of the IAEA, Mohamed ElBaradei, recently urged the US Congress to endorse the Indian nuclear-energy deal, which seeks to lift a 30-year-old ban on India, as it is not a part of the non-proliferation regime. India has agreed to open its civilian installations to IAEA inspection.