India's Civil Nuclear Energy Ambition
India aims to significantly boost its nuclear energy capacity, targeting at least five small modular reactors by 2033 and 100 gigawatts by 2047. The goal is to enhance energy security, diversify energy sources, and phase out coal plants.
Government Initiatives
- The Union Budget 2025-26 emphasizes the promotion of indigenous nuclear technology, particularly Bharat Small Modular Reactors.
- It encourages public-private partnerships with allocated funding for nuclear energy.
- Reforms in nuclear legislation include the SHANTI Act focusing on licensing and civil liability.
Nuclear Energy Financing
- The financing requirement for nuclear energy by 2047 is projected to exceed $200 billion.
- Compliance with International Atomic Energy Agency (IAEA) standards is mandatory.
- Nuclear power plants require more capital investment compared to coal or gas plants, despite lower operating costs.
- Commercial banks are cautious about financing due to long payback periods and asset-liability mismatch risks.
Challenges and Solutions
- Capital markets in developing economies lack depth for long-term local currency financing.
- The OECD has a framework for financing through export credit agencies, focused on imported capital goods.
- India needs to establish a dedicated financing entity for nuclear projects, staffed with skilled personnel for risk management.
Involvement of Multilateral Organizations
- Government guarantees or sovereign support are crucial for covering nuclear-related risks.
- Multilateral organizations can help establish policy frameworks and financing entities.
- The Reserve Bank of India should consider currency swap facilities for hedging purposes.
The writer of the article is a former senior staff member of the Asian Development Bank and Bank of America. The views expressed are personal and not representative of Business Standard.
