Nuclear Energy

India: The True Economic Costs of Nuclear Electricity
Chapter 8
In his statement before the Indian Parliament on July 29, 2005 justifying the Indian
government's decision to enter into a nuclear cooperation agreement with the United States, Prime
Minister Manmohan Singh stated that it would allow us access to nuclear fuel, nuclear reactors and
other technologies from outside, enabling us to produce “cheap and affordable” nuclear energy
which will “enable India to leapfrog its current pace of economic growth”. cdxxx
In his speech while dedicating Tarapur 3&4 reactors to the nation on August 31, 2007, the
Prime Minister stated that we are placing “so much importance on nuclear energy” because it is
“affordable, not only in terms of its financial cost, but in terms of the cost to our environment” cdxxxi .
Whether nuclear energy is environmentally friendly or not, we shall examine in a later
chapter. But definitely, it is not cheap. We have discussed the worldwide costs of nuclear power in
Chapter 4, where we had concluded that nuclear energy is one of the most expensive ways of
generating electricity, and is definitely much more costly as compared to electricity from fossil
fuels. The only way it can be competitive with conventional electricity is if it is highly subsidised
by the government.
The situation is the same with India too. It is the enormous hidden subsidies that nuclear
energy gets that allows the Prime Minister to claim that nuclear energy is and will continue to be
“cheap” and “affordable”.
Even officially, nuclear electricity in India is costlier than electricity from conventional
sources. Nuclear electricity in India costs between Rs. 2.70 and 2.90 a kilowatt-hour (i.e. per unit)
from its reactors built since the 1990s, a price which is far higher than the cost of electricity from
coal-fired plants. cdxxxii
In reality, this official price has no meaning, as the subsidies given are huge.
Part I: Subsidies for India's Indigenous Reactors
The subsidies given by the government of India to nuclear energy are even more than the
massive subsidies given by the US government discussed in Chapter 4.
There is no need to give loan guarantees for nuclear reactor construction in India, as the
nuclear industry is in the public sector. Apart from this implicit subsidy, which greatly reduces the
capital cost of the reactor, the DAE (that is, the government of India) also gives numerous explicit
subsidies to the NPCIL.
The DAE subsidises the NPC in nuclear fuel price, by supplying it fuel bundles from its
Nuclear Fuel Complex at much less than the cost of production. cdxxxiii It also supplies heavy water
(HW) from its heavy water plants for use in NPC's CANDU reactors at subsidised rates. Most of
NPC's reactors are CANDU reactors, and heavy water (HW) is a major cost component of
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