India has a largely indigenous nuclear power programme. The Indian government is committed to growing its nuclear power capacity as part of its massive infrastructure development programme. The government has set ambitious targets to grow nuclear capacity. Because India is outside the Nuclear Non-Proliferation Treaty due to its weapons programme, it was for 34 years largely excluded from trade in nuclear plant and materials, which hampered its development of civil nuclear energy until 2009. Due to earlier trade bans and lack of indigenous uranium, India has uniquely been developing a nuclear fuel cycle to exploit its reserves of thorium. Since 2010, a fundamental incompatibility between India’s civil liability law and international conventions limits foreign technology provision. The scenario has changed now. The nation will have nine nuclear reactors by 2024 and a new nuclear project, the first in northern India, will come up 150 kms away from Delhi in Gorakhpur of Haryana. By 2024, India will have nine nuclear reactors plus 12 new additional ones which were approved during the Covid times with a capacity of 9000 MW. India is counting on its nuclear program to help meet its Paris climate commitments to reduce the emissions intensity of its economy by a third from 2005 levels by 2030. Earlier, most of our nuclear projects were with the support of Russia and France and now more and more of our reactors are becoming indigenous.
New nuclear power plants typically have high capital expenditure for building the plant. Fuel, operational, and maintenance costs are relatively small components of the total cost. The long service life and high capacity factor of nuclear power plants allow sufficient funds for ultimate plant decommissioning and waste storage and management to be accumulated, with little impact on the price per unit of electricity generated. Additionally, measures to mitigate climate change such as a carbon tax or carbon emissions trading, would favor the economics of nuclear power over fossil fuel power. Nuclear power construction costs have varied significantly across the world and in time. Large and rapid increases in cost occurred during the 1970s, especially in the United States. There were no construction starts of nuclear power reactors between 1979 and 2012 in the United States, and since then more new reactor projects have gone into bankruptcy than have been completed. Unlike in the past when nuclear plants were limited to a few states like Andhra Pradesh and Tamil Nadu, the department has now moved northwards. We are going to have a nuclear project, the first of its kind, in North India just about 150 kms from here in a small township called Gorakhpur in Haryana. The nuclear energy will soon emerge as one of the most important sources of alternative or clean energy for the increasing power demand of the country. As far as the cost is concerned, though it varies from plant to plant and on the age of the plant, on an average it comes to about Rs 3 per unit and while the Kudankulam plant has about Rs 4 per unit and Tarapur has lesser cost. it was during the tenure of this government that a bulk approval of 10 indigenous reactors was done in a single cabinet decision, which is a record in itself and has never happened in the history of independent India. The government took an out-of-box decision of allowing the atomic energy department to enter into joint ventures, which was never happening before, and the insurance pool has also been increased
Nuclear energy in India
Among all the developing nations, India is the only one to have generated electricity using indigenously developed, demonstrated, and deployed nuclear reactors. India ranks third in terms of electricity production worldwide by producing 1207 TWh of electricity. Nuclear energy is the fifth-largest source of electricity for India. India also stands at seventh position in terms of the number of nuclear reactors, with over 23 nuclear reactors in 7 power plants across the country which produces 6780 MW of nuclear power. With an aim to increase its atomic power contribution from 3.2% to 5% by 2031, this surge in the nuclear energy contribution in India will help the country lead towards a more sustainable and economic future.
Nuclear power is an efficient way of boiling water to create steam; this steam is used to turn turbines, which creates electricity. Compared to other forms of renewable energy Nuclear energy is considered beneficial, because of its smaller land footprint and the amount of waste it produces. Nuclear energy uses 360 times less amount of land as compared to wind farms and 75 times less land as compared to solar photovoltaic plants. Nuclear fuel is energy-dense as a 1-inch-tall Uranium pallet is equivalent to 120 gallons of oil and about 17,000 cubic feet of natural gas. The main objective of India’s nuclear energy program was the utilization and development of Atomic energy for peaceful purposes. India wanted to develop a cheap and efficient power source and use nuclear energy for various other research purposes like basic sciences, astronomy, astrophysics, cancer research and education. As the Indo-US nuclear pact of 2005 is yet to result in new projects with foreign aid, the Union Government is working on an indigenous nuclear power programme with six pressurised heavy water reactors (PHWRs) under construction and additional 10 approved. One of these standard 700 MW PHWRs — Kakrapar Atomic Power Project (KAPP-3) in Gujarat — is poised to become operational this year. The Department of Atomic Energy (DAE) is pursuing an ambitious plan to raise the share of nuclear power generation in the national pie. The present installed nuclear power capacity of 6,780 MW is expected to reach 22,480 MW by 2031 on the completion of projects under construction.
Operational Nuclear Power Plants-2021
Nuclear Power is the fifth-largest source of generating electricity in India after coal, gas, wind power, and hydroelectricity. At present, India has 22 operational nuclear reactors with an installed capacity of about 6,780 MW. The nuclear energy programme in India was launched around the time of independence under the leadership of Homi J. Bhabha. Asia’s first nuclear reactor is the Apsara Research Reactor situated in Mumbai. The domestic uranium reserve in India is small and the country is dependent on uranium imports from other countries to provide fuel to its nuclear power industry. Since the 1990s, Russia has been a major supplier of nuclear fuel to India. The Government of India is committed to increasing its nuclear power capacity as part of its infrastructure development programme. For this, the Centre has set several ambitious targets in the coming years. India is outside the Nuclear Non-Proliferation Treaty due to its weapons programme and was largely excluded from trade in nuclear plants and materials for a period of 34 years, which impacted its development of civil nuclear energy until 2009.
|Power Plant||Location||Operator||Type||Total Capacity (MW)|
|Madras (Kalpakkam)||Tamil Nadu||NPCIL||IPHWR-220||440|
The present nuclear power capacity is 6780 MW comprising of 22 reactors. There are 9 reactors with a capacity of 6700 MW (including 500 MW PFBR being implemented by BHAVINI) under construction. The Government in 2017 has also accorded administrative approval and financial sanction of 12 nuclear power plants totalling to a capacity of 9000 MW. On their progressive completion, the installed nuclear capacity is expected to reach 8180 MW by 2020 and 22480 MW by 2031.
Indigenous nuclear power programme
India’s nuclear program has an ambitious three-stage power production program; this program was meant to be a closed fuel cycle program in which every stage feed into each other. To put this in perspective in the first stage of the nuclear fuel cycle the spent nuclear fuel still contains 96% of reusable material, this material is used again in the second stage and the spent fuel of the second stage is reused for the third stage. This creates a closed chain where the fuel is being reused and recycled to maximize efficiency. The country was able to successfully reach the first stage of the nuclear energy program in 2013 with over 22 nuclear reactors in 7 nuclear power plants. The country produces 6780 MW of nuclear energy. The country has already generated 755 billion units of electricity and has saved 650 million tons of CO2 emissions.
The committee earlier asked the government to power indigenous heavy water reactors, noting that the Indo-US pact had so far not resulted in new commercial projects, barring Kudankulum project in Tamil Nadu. It would be better for the DAE to adopt a standardised 700 MW heavy-water reactor and use that design for its expansion plan in an aggressive manner. Apart from the six PHWRs, the government has sanctioned 10 more to be set up in fleet mode. Pre-project activities are in progress in respect of these 10 PHWRs.
India nuclear insurance pool
The idea of forming a pool was mooted in early 2013 and got stuck due to differences among stakeholders on certain clauses. In 2010, Parliament passed the Civil Liability of Nuclear Damage (CLND) Act, which creates a liability cap for nuclear plant operators for economic damage in the event of an accident. India Nuclear Insurance Pool of 1,500 crore rupees was launched as per the mandatory provision under the CLND Act, 2010. The pool provides capacity for insurance coverage to operators and suppliers for any nuclear liability towards third party. India Nuclear Insurance Pool also offer policies on the nuclear operators liability insurance policy and a nuclear suppliers’ special contingency (against right to recourse) insurance policy. General Insurance Corporation of India (GIC Re) and 11 other non-life insurers have formed the India Nuclear Insurance Pool. It will have a capacity of Rs 1,500 crore. It was formed as a risk transfer mechanism to cover/transfer the risks of operators’ and suppliers’ liability under the CLND Act (Section 6(2) and Section 17, respectively) to INIP.
New India Assurance issue the policy and deal with management of cover to the operators and suppliers, on behalf of all direct insurance companies participating in the pool. Apart from GIC Re, New India, Oriental Insurance, National Insurance and United India Insurance from the public sector, the private ones are ICICI Lombard General Insurance, Tata AIG General, Reliance General Insurance, Chola MS General Insurance, IFFCO Tokio General Insurance, SBI General and Universal Sompo General. The policies offered will be a nuclear operators liability insurance policy and a nuclear suppliers’ special contingency (against right to recourse) insurance policy. This pool is the 27th such market pool globally. It addresses third-party liability insurance to begin with and later expand into property and other hot zone (inside reactor areas) risk. This covers both operators and suppliers. At present, only cold zones (outside reactor areas) are covered. The country had achieved another milestone in the nuclear energy industry by setting up this pool. The CLND Act also provides for state-run Nuclear Power Corporation of India, which operates all atomic power plants in India, to seek compensation from suppliers in an accident due to faulty equipment. The CLND Act provides for Rs 1,500 crore as maximum liability for nuclear damage.
The reinsurance support had come from Nuclear Risk Insurer from London. Going forward, GIC Re as the pool manager will strive to ensure that this pool develops into a one-stop facility for covering all nuclear risks. This pool provides the risk transfer mechanism to the operators and suppliers to meet their obligations under the CLND Act. At a later stage, this pool also looks to provide reinsurance support to other such international pools. Insurance through the pool is a solution for suppliers’ concerns about liability from nuclear risks. GIC Re, India’s national reinsurer, is in charge of a US$222m nuclear insurance pool, which is an arrangement to cover exposures of nuclear power operators and suppliers. Parts of the pool are 11 other domestic insurers, which cover civil liability risks in accordance to the Nuclear Damage Act 2010.
The India Nuclear Insurance Pool (INIP) unveiled the Nuclear Supplier’s Insurance Policy for Right to Recourse (Under CLND Act 2010). This Right to Recourse Policy works back to back with the ‘Nuclear Operator’s Liability (CLND ACT 2010) Insurance Policy’ which was issued to Nuclear Power Corporation of India Limited (NPCIL) on 26th of May 2016. The Supplier’s Policy was unveiled by Chairman, Atomic Energy Commission at Mumbai on the 12th of August 2016. The New India Assurance Company Limited, one of the major capacities providing non-life insurance company for the INIP has volunteered to issue the policy and administer the claims, as and when notified, on behalf of the Pool. INIP, the 27th Global Nuclear Insurance Pool, was launched on 12th June, 2015 by General Insurance Corporation of India (GIC Re), the National Reinsurer of India. The INIP has been formed by collating capacities from member companies to underwrite exposures arising out of the passage of Civil Liability of Nuclear Damage Act, (CLNDA) 2010. The Pool provides capacity for Insurance Coverage to Operators and Suppliers for any nuclear liability towards third party under CLNDA 2010.
Nuclear Plant Insurance
India’s first insurance policy covering public liability to an atomic power plant operator was issued to Nuclear Power Corporation of India Ltd (NPCIL). The total premium came around Rs. 100 crore for a risk cover of Rs. 1,500 crore. The policy complies with all the provisions of the Civil Liability for Nuclear Damage Act (CLND). The insurance policy was issued by the country’s largest non-life insurer New India Assurance Company Ltd. The policy covered the liability towards public as a consequence of any nuclear accident in the plants covered under the policy and also the right of recourse of NPCIL against equipment suppliers. The insurance coverage was for all the NPCIL’s plants— like a floater cover. The policy complied with all the provisions of the Civil Liability for Nuclear Damage Act (CLND). The pool provides capacity for insurance coverage to operators and suppliers for any nuclear liability towards third party. It will also provide the risk transfer mechanism to the operators and suppliers to meet their obligations under the CLND Act, 2010.
Nuclear Power Plants in India 2021- Planned Projects
|Power Plant||Location||Operator||Type||Total Capacity (MW)|
|Kudankulam Unit 5- 6||Tamil Nadu||NPCIL||VVER-1000||2,000|
India’s nuclear power could provide a reliable solution to India’s power demand as against wind and solar that is not available round the clock. This could further lead to a reduction in India’s contribution to global Green House Gases (GHG) which stood at 6.55%, with energy sector contributing a little over two-third towards it. India’s current nuclear power capacity of 6,790 MW is expected to increase to 22,480 MW by 2031. This in turn is going to assist the country in meeting zero energy targets along with other clean energy sources.
Current scenario of Nuclear power plants insurance
Insurer New India Assurance (NIA) has issued an insurance policy covering the Nuclear Power Corporation of India Ltd (NPCIL). The public sector insurer covered the NPCIL’s 21 nuclear plants for a premium of US$14.8m. The new policy was issued on May 26. Previously, NIA provided property insurance for cold and hot zones separately. New India Assurance issued the policy for the all the existing plants of NPCIL. It will cover the hot zones for these plants. There will be a separate cover for suppliers. There are 21 existing nuclear plants in India, with five more to be launched. NPCIL currently generates 4,750 MW of nuclear power, and the power firm aims to triple the output by 2022. A recent incident at Kakrapara Atomic Power Station led to shutting down of one of the plant’s units due to leakage of coolant water. This led to increased interest in nuclear liability insurance, echoing larger incidents such as Chernobyl and Fukushima in other countries.
The main suppliers’ of policy under INIP is ‘Nuclear Supplier’s Insurance Policy (Right to Recourse only under the CLND Act)’ (“NSIP”) and it provides coverage for the supplier’s liability under Section 17(a) and/or (b) under the CLND Act. While the terms of NSIP are not available in public domain, based on some publicly available information the main concern of suppliers inter alia relate to the fact that a supplier can avail a policy under NSIP only once the operator has availed a policy for the nuclear power plant under the operator’s policy i.e., Nuclear Operator’s Liability (CLND Act) Insurance Policy (“NOLIP”). Importantly, NOLIP needs to remain in full force and effect for the entire term of NSIP for a supplier to be able to make a claim under the NSIP. Further, NSIP is issued as only a right of recourse policy, offering to hold the supplier harmless should the operator exercise its rights against the supplier under Section 17(a) and/or Section 17(b) of the CLND Act. And, thus, NSIP would not indemnify a supplier against any liability under Other Laws or any other laws of any other country (or under Section 17(c) of the CLND Act).
Nuclear Power Plants in India 2021- Under Construction
|Power Plant||Location||Operator||Type||Total Capacity (MW)|
|Madras (Kalpakkam)||Tamil Nadu||BHAVINI||PFBR||500|
|Kakrapar Unit 4||Gujarat||NPCIL||IPHWR-700||700|
|Rajasthan Unit 7 & 8||Rajasthan||NPCIL||IPHWR-700||1,400|
|Kudankulam Unit 3 & 4||Tamil Nadu||NPCIL||VVER-1000||2,000|
Liability under Indian & other laws
In 2010, the Civil Liability for Nuclear Damage Act, 2010 (CLND Act, 2010) was enacted. The Civil Liability for Nuclear Damage Rules, 2011 (CLND Rules, 2011) were notified in 2011 and were made part of subordinate legislation under the CLND Act. Assignment of liability under the Nuclear Liability Act has been a hotly debated issue in relation to the US-India agreement and the promotion of nuclear commerce in India few years ago. Section 17(b) and section 46 of the Nuclear Liability Act have been the primary bones of contention. Section 6 of the act limits the liability of an operator of a nuclear power plant and section 17 of the act provides the operator a right of recourse to suppliers after paying compensation under section 6. Sections 17(a) and 17(c) are comparable to article X of the Vienna Convention and article 10 of Annex to the Convention on Supplementary Compensation for Nuclear Damage. Section 17(b), which is unique to the Nuclear Liability Act, makes available a right of recourse if the nuclear incident was a result of an act of a supplier (or its employee) or supply of defective equipment or sub-standard services if the contract does not provide so.
Another cause for concern arises from section 46, which states that the provisions of the Nuclear Liability Act are in addition to, and not in derogation of, any other applicable law. Therefore, the Nuclear Liability Act does not exempt the operator from any proceeding under a law such as the law of tort. This means that an operator could be made liable under tort law for claims in excess of the limits specified in the act. CLND Act has complicated efforts to spur the country’s use of atomic power as international equipment makers fear it would leave them liable for any accidents. Since its enactment in 2010, the country has taken steps to convince foreign suppliers that its law adheres to international standard. In 2014, the US too had raised similar concerns about Clause 46 in particular. Things are unclear over how much insurance cover does supplier have to take. There is still a lot of ambiguity in this. The legal framework for foreign direct investment (“FDI”) in India does not permit foreign investment in atomic energy.
How much cover is good enough?
One of the key themes for global nuclear industry captains and Indian insurance companies is- How much cover is good enough for nuclear business. Does a Rs 15-billion insurance cover serve the expanding nuclear business in India? Even though the target of 63 GWe of nuclear power by 2032 set by its National Energy Policy looks far too ambitious to achieve, the scaled-down 22 GWe would also need more insurance cover. It also makes private companies reluctant to invest in the Indian nuclear projects, giving state-run ventures like those from Russia and France an advantage over them. The Indian reinsurance company, GIC-Re, with the four state-run insurance companies, is in a difficult position to try to convince the foreign companies that the sum is adequate for now. The Indian government had set up the Rs 15-billion India Nuclear Insurance Pool on June 12, 2015, to provide cover corporate liability against any accident at nuclear plants. The cover comes under India’s Civil Liability for Nuclear Damage Act of 2010 (CLND Act). The pool was created as India stepped out to solicit more investment in its power sector by nuclear power developers.
The sum agreed to essentially caps the liability of the insurers, even as project developer companies are told that their liability is unlimited. The Indian government claims, not incorrectly, that the risks are quite unlikely, so making the pool a larger sink only leads to larger demand for greater capital from GIC-Re and the four insurance companies. Though there are seven other Indian insurance companies with stakes in the pool, such as ICICI Lombard and Tata AIG, their stakes are narrow. The big money comes from the government-run New India Assurance, National Insurance, United India and Oriental Insurance, each of which contributes Rs 3 billion to the corpus. There is a way out, if the foreign project developers are allowed to buy their insurance covers from abroad. That route is, however, blocked since it would mean the foreign insurance companies would have the right to inspect the power plants being developed in India, before they offer any cover. India’s offering them that path is ruled out since the cornerstone of its nuclear policy is that several of its nuclear facilities are outside the pale of inspection by any foreign entity. So the only option available for the project developers is to buy insurance cover through India’s Civil Liability for Nuclear Damage Act of 2010.This pool is to address liability related concerns of suppliers under the CLND Act 2010 and paving the way for Indian as well as foreign suppliers to participate in the Indian Nuclear Power Projects.
As of now, India is developing eight nuclear power projects. Russia is already in a pole position in the market, but hopefully for the others, India plans to bid out more. In this context, the meeting is expected to see more push back by the attendees to relax the rules for buying insurance. India knows it is among the few shrinking list of countries where the business is expected to grow. Switzerland, for instance last year, has joined the list of countries to shutter its nuclear power projects in a decade. So India will want to keep its policies going. Insuring the nuclear power units at Kudankulam is one of the largest insurance contracts from India in recent years. The insurance cover of more than Rs.43,200 crore is sought for the under-construction units 3 and 4 of the Kudankulam Nuclear Power Plant. The annual premium is more than Rs.150 crore. The amount of the policy, at Rs.43,200 crore, is itself huge and enough to entice the largest global reinsurers. Under law, New India cannot approach another reinsurer without GIC Re’s permission. Reinsurers underwrite risks that are too large for insurance companies to handle on their own. This allows insurers like New India to obtain more business than they would otherwise be able to. GIC Re’s first right of refusal under law means local general insurance companies such as New India must first approach it to back them before taking large risks.
GIC Re has annual treaties with all general insurance companies, which are like a promise of support to jointly underwrite risk. It is now up to the companies to follow up with their own negotiations and come up with viable techno-commercial offers and contracts consistent with India’s law and India’s practice so that reactors built with international collaboration can start contributing to strengthening India’s energy security and India’s clean energy options. GIC Re has annual treaties with all general insurance companies, which are like a promise of support to jointly underwrite risk. Because of the extra impetus given by the prime minister to the enhancement of atomic energy generation and setting up of new units of the reactor, the Kudankulam plant has been progressively showing new constructions and generation. “By 2024 you will have nine nuclear reactors plus 12 new additional ones which were approved during the Covid times with a capacity of 9000 MW. Five new sites are also being identified. the present installed nuclear power capacity in the country is 6,780 MW and the share of nuclear power in the total electricity generation in the country is about 3.1 per cent in the year 2020-21. The net zero targets are expected to be met through a combination of various clean energy sources, including nuclear power. In this context, the present nuclear power capacity of 6,780 MW is planned to be increased to 22,480 MW by 2031 on progressive completion of projects under construction and accorded sanction. More nuclear power reactors are planned in future.