Kudankulam is still the cheapest of all foreign-built nuclear plants

Kudankulam Nuclear Power Plant’s unit 3 and 4, for which Prime Minister Narendra Modi and Russian President Vladimir Putin on Saturday laid the foundation through video-conferencing, are expected to sell electricity at ₹3.90 a kilowatt hour (kWh), according to World Association of Nuclear Operators (WANO).

KKNP 3 and 4, with a net capacity of 917 MW each, will cost ₹39,849 crore ($6.5 billion) to build. The first two units, the second of which was connected to the grid only in August 2016, cost ₹17,270 crore, but the cost is under revision to ₹22,462 crore. The Kudankulam plant’s equipment and fuel are supplied by Russia’s State Atomic Energy Corporation (Rosatom).

Despite costing twice as much as the first two units, 3 and 4 will still sell their electricity at the same price.

The price of the second set of units nearly doubled from the first two because of India’s Nuclear Liability Act. The 2010 vendor liability law gives the operator of the plant the natural right to sue the equipment supplier for damages in case of a nuclear mishap due to a defect in the equipment or services.

The right to sue kicks in even if an employee of the equipment supplier causes the mishap with a mala fide intent. The law causes the equipment supplier to take extra insurance cover, which is added to the project cost.

The Russians have been able to get ahead, while European and American companies are stuck over the Act.

French firm Areva wants to build six nuclear plants of 1,600 MW capacity each at Jaitapur, Maharashtra, for the Nuclear Power Corporation of India. The cost of the first two plants is expected to be ₹1,20,000 crore, or ₹37.50 crore per MW. In contrast, two plants of 700 MW each, that NPCIL plans to build at Chutka, Madhya Pradesh, are estimated to cost ₹16,550 crore, or ₹11.80 crore/MW.

The Areva plants, with a 60-year operating life, would be viable at a tariff of ₹9.18/kWh. Quoting reports, WANO says in its country update that the Department of Atomic Energy is “adamant” that the tariff could not exceed ₹6.5/kWh.

The difference between the Russians and the Westerners, experts have pointed out, lies in the perception of the ‘liability risk’. A close reading of the Act shows that the operator (NPCIL) cannot sue the equipment supplier (Rosatom) more than what the operator itself is liable for damages, which has been capped at ₹1,500 crore. However, what apparently continues to niggle European and American companies is another provision in the Nuclear Liability Act, which empowers the operator to sue the equipment supplier under “any other law in force”, too, such as the law or torts permit.

The Russians have brushed these aside and moved on, while the Westerners are still doing the numbers. Rosatom has said it expects to sell around 18 reactors to India. The next reactors that could come from the company would be the more modern VVER-1200 MW machines. The next four plants are expected to come up at Kavali in Nellore district of Andhra Pradesh.

Inaugurated now, Kudankulam 3 and 4 units will take a quarter short of six years to complete, assuming there will be no delays. Fuel for these light-water reactors will be provided by Russia. Typically, a light-water reactor needs 25 tonnes of low-enriched uranium a year, when it is operating at 90 per cent of its capacity.

India’s nuclear power capacity today stands at 5,780 MW (5,308 MW net), compared with the US’ 1,00,350 MW, France’s 63,130 MW, Japan’s 40,290 MW, China’s 30,402 MW and Pakistan’s 690 MW.