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Quiet burial for the nuclear deal? via Gateway House

Solar power developers have offered to sell electricity in India at less than Rs 5/unit. This makes solar competitive with traditional forms of energy, and makes new nuclear power plants financially unviable. India must register the changed reality, and discard the idea of expensive Western reactors. Time to scrap the India-U.S. nuclear deal?

Hard on the heels of falling oil prices and affordable shale, comes another dramatic energy changes for the energy industry: The falling cost of solar energy. This has many implications, but the most immediate impact the nuclear power industry, large parts of which may have just become obsolete. This means that the new nuclear power plants being planned by India, especially those with foreign collaboration, must be reconsidered and scrapped if they are financially unviable.

Most significant is the impact on the India-U.S. nuclear deal, held up by the liability clause to enable these reactors, and a sticking point in the bilateral for several years: technological advances have addressed an issue that negotiators couldn’t resolve.

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Where does India stand in its nuclear energy build-out? India proposes to build three more nuclear power plants in collaboration with foreign firms – GE-Hitachi, Westinghouse and Areva. The capital cost of these reactor designs elsewhere in the world is $6 million per megawatt[7][8]. This is almost twice the cost of the Russian design which is currently under construction at Kudankulam, and three times the cost of India’s own indigenous designs[9]. This means electricity from any of the reactors built with Western collaboration, if and when they get completed, will be hopelessly expensive – compared to coal, hydro, (other) nuclear or now solar electricity. Fiscal prudence alone dictates that these projects should be scrapped.

The Western reactors also come with other conditions, including the dilution of the liability clause in India’s civil nuclear bill. The latter is a difficult proposition, given the backdrop of the 1984 Bhopal tragedy and the more recent 2011 Fukushima disaster. The one argument in favour of the Western reactors – that they will provide electricity without causing carbon dioxide emissions — is now negated by the vastly cleaner, cheaper alternative, i.e. solar energy.

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Localised generation, which is possible with solar, can help bring down transmission losses. Adoption of solar power will still be hobbled by the poor financial health of India’s state power utilities, which collectively incurred a loss of Rs 62,154 crore ($9.5 billion) during FY14 and find it difficult to pay for the electricity they purchase[11]. However, solar power will still be a better option than more expensive nuclear power.

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