Representative image of nuclear power plant. (Image source: GE Power)

The Indian Nuclear Energy sector is looking up but it has still a long way to go. Brain behind the Homi Bhabha National Institute (HBNI) Padma Shri Dr. Ravi B Grover and present member of the Atomic Energy Commission (AEC) decodes the challenges facing the nuclear energy sector in the country in an interview with Nuclear Asia.

– As per an analysis it is said that per unit cost of electricity produced through nuclear reactors will be about Rs 4/unit. So how the nuclear energy is economical when compared with other major renewables like solar or wind?

– An electricity generating plant provides electricity to a consumer through a transmission and distribution network. It does not exist in isolation. It is a part of an electricity grid. One can divide the cost of electricity in two parts namely – plant-level costs and grid-level costs. Plant level costs arise from capital cost and generation cost. Generation cost combines the cost of capital (that is return on equity and interest on debt), fuel, operation and maintenance. Owner of an electricity generator focuses on plant level costs. Extent of attention paid to grid level costs depend on how policies of the grid owner influence his operation and profits.

Components of grid level costs, apart from losses, are as following – Grid connection, Grid extension and reinforcement, short-term balancing costs and long-term costs for maintaining adequate back-up supply. All commercial electricity generators are connected to the grid. In some countries pumped storage facilities are in operation to store any excess electricity. However, compared to the size of the grid, such facilities in India are extremely limited. Therefore, generation must always match demand. In view of their intermittent nature, Variable Renewable Energy (VRE) sources, such as solar and wind, generate ‘system effect’ that are significantly larger than those caused by ‘dis-patchable’ technologies that is the technologies that are available when needed such as nuclear, large hydro and thermal. VRE sources demand strengthening of the grid, impose higher level of short-term balancing costs as well as long-term costs for maintaining back-up supply. Such costs are known as ‘system costs’.

To explain in simple language, for arriving at peak load that grid has to cater to, one cannot take advantage of VRE sources as they may not be available when peak demand arises. Total installed capacity based on dis-patchable sources have to be equal to the peak load and therefore, capital investment in VRE generators is an additional investment. The policy of priority feed-in available to VRE generators forces dis-patchable generators to operate at low capacity factors and thereby raises the cost of electricity generation.

Draft National Electricity Plan issued by the Central Electricity Authority (CEA) in December 2016 explains system costs in qualitative terms and system costs have been quantified by studies in other countries and compiled in a report by the Nuclear Energy Agency of OECD.

To quote one example, based on data from Germany, at 10% penetration, system cost of generation by solar is ₹2.32 per unit, while for nuclear, it is ₹0.02 per unit. Further, for VRE, it rises with increased penetration, while for nuclear, it marginally declines with increased penetration. Policies adopted in India do not assign system costs to VRE generators. Rather to encourage generation by VRE sources, they are provided with priority feed-in. Result is that coal-fired power plants have to back down whenever VRE sources are available resulting in operation of coal-fired plants at low capacity factors. This can be clearly inferred from the data on CEA website. Priority feed-in provided to VRE generators without asking them to make provision for storage is a huge subsidy. No attempt has been made in India to quantify this subsidy.

Comparing cost of generation of electricity by nuclear with that of solar and wind without including system costs amounts to ignoring a huge subsidy. From a long-term point of view, ignoring this fact will reduce the reliability of Indian electricity grid which is already suffering from large transmission and distribution losses. While deploying various energy sources, the government should factor in all costs and benefits in a transparent manner so that energy can be made available to citizens at affordable prices and with a high degree of reliability. Research and development is needed to develop electricity storage technologies at industrial scale so that system costs of VRE sources can be decreased and extent of penetration can be increased. Considering imperatives of climate change, a judicious mix of all low-carbon energy generating technologies that is VRE, large hydro and nuclear, should be incentivised.

Therefore, a short answer to your questions is: at the current stage of technology development, nuclear is cheaper when system costs are accounted for.

– The EU’s ExternE project 1990-2005 says that nuclear energy generation has the least side-effects on health as compared to power created from lignite, coal, oil, gas and biomass. What are the factors responsible for the government to take a passive approach as opposed to an aggressive one to push the nuclear energy sector?

– Let me first elaborate the concept of health costs. Health effects arise due to pollutants such as particulate matter and harmful gases released through the stack, and manifest as external costs. The term ‘external costs’ is used to denote the cost that the party responsible for generating emissions does not account for and consequently consumers of electricity do not pay for. External costs are paid in terms of health effects (deaths, serious illness, minor illness) by those who are exposed to emissions.

External costs have been extensively studied in the European Union through ExternE project over about 15 years’ period beginning in early 1990s and ending in 2005. Study follows dose-response approach, where pathways through which pollutants are dispersed are mapped, dose of pollutants received by humans is estimated, its health effects studied and finally a monetary estimate (lost working days and cost of medication) of the health effect is evaluated. Results are well summarised by Markandeya and Wilkinson (2007) and nuclear has minimum health effects or external costs among the electricity generation technologies studied namely, lignite, coal, oil, gas, biomass and nuclear. All aspects related to radioactivity were factored in the study.

Following ExternE, EU launched another project, New Energy Externalities Development for Sustainability (NEEDS) and this study (Ricci A, 2009) also concluded that nuclear has very low external costs as compared to other technology options. On the basis of low external costs, this study favours nuclear along with wind and solar.

Coming to your question about the approach followed by the Government of India, I feel in recent years the Government has been very pro-active about growth of nuclear energy in India. India’s uranium resources are modest and it has not been possible to set up several nuclear power plants. The Government of India has followed a two-pronged approach. The first is to take steps to locate more uranium sources in the country and open more mines. And more mines have now been opened. The second approach has been to have dialogue at the international level and facilitate international civil nuclear trade. This also has been done and in 2008, Nuclear Suppliers Group amended its guidelines to facilitate international civil nuclear trade with India. Since then India has signed nuclear cooperation agreements with about a dozen countries including Australia, Canada, France, Japan, Kazakhstan, Russia, USA and others. All formalities with regard to agreement with Japan were completed only a few weeks back. This has enabled India to import uranium from international market and also sign agreements for setting up reactors in technical collaboration with other countries.

Signing of agreements also opens the possibility of importing equipment for nuclear power plants being set up in India. It will, of course, be based on competitive bidding process. At present four Pressurised Heavy Water Reactors (PHWRs) are under construction, construction of two reactors was approved a few years ago and construction of ten PHWRs was approved recently. All these PHWRs are of 700 MW rating. When completed these 16 reactors will result in addition of 11,200 MW of nuclear installed capacity.

In addition, agreement with Russia to construct four more reactors at Kudankulam, each of 1000 MW, has also been reached. The Government has also announced its commitment to construct six reactors of 1200 MW rating in cooperation with Russia at a new site. Plans to construct additional fast reactors after the Prototype Fast Breeder Reactor, now under commissioning, has also been announced. Statements made by the Government indicate that dialogue with the companies in the USA and France is also ongoing. However, no time table for a concrete outcome has been announced. If you sum up all this, I think it is quite an aggressive programme and it is needed for India.

– The dynamic Energy Return On Investment (EROI) for nuclear is (62), hydro-57, wind-39, coal-38, gas 8 and solar 6. This data does not factor in energy associated with grid integration, which is very high for solar and wind. In such scenario why is the progress on nuclear energy so less?

– First, let us understand the concept of Energy Returned on Investment, EROI is short. The basic idea behind this was first articulated about six decades ago in terms of life cycle assessments. Subsequently, in 1980s it was articulated in terms of net energy gain, and more recently in terms of EROI. Net energy gain or useful energy that is available to society is the difference between energy returned and energy invested. It is an evolving field of study and precise value of EROI for various energy systems are being calculated only in recent years. Several complexities are involved in method of calculations. The first is system boundary. Take the case of petroleum. One can calculate EROI for extraction of petroleum. Or one can include the complete chain involving extraction, refining and transport to the end user. At every stage of this chain energy has to be invested. Therefore, it is very important to draw appropriate system boundary when one is comparing various energy systems.

The second issue is to appreciate the difference between primary energy and electrical energy. Take the case of a thermal power plant. Burning of coal in the boiler produces heat, which heats up water and converts it into steam. Steam runs a turbine and generates electricity. Steam exhausted from the turbine is condensed resulting in rejection of some of the thermal energy to atmosphere which in the language of thermodynamics is called heat sink. As per laws of thermodynamics, fraction of thermal energy that can be converted into electrical energy depend on temperatures of the heat source and the heat sink and it is not possible to convert all the thermal energy into electrical energy. Thus, primary energy and electrical energy are two different forms of energy and in calculations of EROI, one has to understand the difference. Some conventions have been developed by energy economists for such an analysis. While comparing data from different researchers, one has to ensure that proper convention has been followed by those whose data is being compared.

The third issue is accounting for difference between EROI of an energy source and EROI of the grid which has several sources connected to it. EROI of the grid is a weighted average of EROI of all sources connected to it. While setting up energy infrastructure, one draws electricity from the grid and grid in any region will have an EROI. This could be higher or lower than the EROI of the source being investigated. One has to apply a correction for this factor to arrive at the inherent characteristic of the energy source under investigation. EROI which has been so corrected is called dynamic EROI.

The final issue is what value of EROI is adequate for a grid. This is a difficult question and to understand it, please see figure 1, which was first presented by a petroleum engineer, E. Mearn in a conference organised by the Royal Society of Chemists in Scotland in 2008.

One may note that useful energy available to society as percentage of energy invested decreases slowly with decreases in EROI until about EROI equal to 8 or 7 and then it decreases sharply. This diagram, popularly known as Energy Cliff, provides guidance about what value of EROI is necessary from the point of view of usefulness of a given energy source to society. Energy cliff shown in figure 1 tells us that a very low value of EROI cannot provide a sustainable source of energy. Setting up of energy infrastructure and generation of electricity involves flow of construction material as well as water. Lower the EROI, larger will be the environmental foot print of a given source of energy. Energy economists are coming to understand these issues only now and when this understanding becomes widespread, society will realise the gains that can accrue from energy sources having high value of EROI. In the literature, one can see some criticism of the concept of EROI because different publications give different numbers. The difference comes from issues of boundary and consistency, but there is no doubt about nuclear having a high EROI. Overall, I am optimistic about the place of nuclear energy in any future electricity mix in India as well as at the global level.