The Private Sector's Contribution to India's Nuclear Energy

The Indian government unveiled the Union Budget for FY 2024–25 in July 2024, laying out goals to grow the nuclear energy industry in the nation. One significant proposal involved partnerships with the private sector to advance research and development (R&D) for Bharat Small Reactors (BSR), Bharat Small Modular Reactors (BSMR), and newer nuclear energy technologies. This project is in line with India's overarching objective, which was announced at the COP26 Summit in 2021, to decarbonize its energy industry and generate 500 gigawatts of energy other than fossil fuels by 2030.

The existing legal structure pertaining to nuclear energy

Atomic Energy Act, 1962 (AEA): The Atomic Energy Act, 1962 (AEA) gives the central government the sole authority to create, develop, and oversee atomic energy, and it is the main legislation governing India's nuclear energy industry. These clauses were kept in place after an amendment in 1987 that emphasized the government's cautious stance toward nuclear energy in view of the possible hazards. The AEA expressly forbids private involvement in the essential processes involved in the production of nuclear electricity in Section 3(a).

Latest ruling from the Supreme Court:

In the Sandeep T.S. vs. Union of India & Ors. decision, decided in September 2024, the Supreme Court maintained these limitations despite a plea that questioned the legitimacy of forbidding private sector participation. The Court underlined that strict safety measures are necessary for the usage of atomic energy in order to reduce the possibility of misuse or accidents.

Act of 2010 on Civil Liability for Nuclear Damage: The Civil Liability for Nuclear Damage Act, 2010 (CLNDA), which guarantees compensation to victims of nuclear accidents, is another essential piece of legislation in India's nuclear regulatory system. The validity of the Act has been contested, with opponents claiming that it goes against the "absolute liability" and "polluter pays" concepts. Since the Supreme Court has not yet made a decision in this case, regulatory uncertainty has increased and could prevent private investment in the nuclear energy industry.

The Part Played by the Private Sector

Despite these legislative restrictions, there is increased interest in finding ways to reconcile the nation's energy objectives with the strict requirements of its regulatory framework in light of the government's recent declaration regarding private sector participation in nuclear energy.

Traditionally, the Department of Atomic Energy (DAE) and the Nuclear Power Corporation of India Limited (NPCIL) have maintained overall authority over nuclear energy operations, with the private sector only being involved in ancillary sectors like engineering, procurement, and construction (EPC).

While companies such as Megha Engineering & Infrastructures and Reliance have been involved in reactor infrastructure construction, they have been rigorously forbidden from participating in research and development.

The Function of Small Modular Reactors in NITI Aayog

A paper titled "The Role of Small Modular Reactors in the Energy Transition" was published in 2023 by the DAE and NITI Aayog. In it, the authors recommended specific measures to encourage private sector participation in SMRs. The study highlighted important facilitators, including the development of a supportive regulatory environment headed by national regulators and the construction of a clear civil nuclear liability framework to promote long-term private sector involvement.

The research also mentioned that up to $26 billion in private sector investments might go a long way toward helping India meet its energy targets. The AEA's Section 3(a) legislative limits, however, continue to be a significant barrier to extending private participation beyond EPC responsibilities.

Regulatory Difficulties

Safety and regulatory control are among the main issues raised by the growing involvement of the private sector in nuclear energy. Nuclear safety in India is governed by the Atomic Energy Regulatory Board (AERB), which was founded in accordance with Rule 35 of the Atomic Energy (Radiation Protection) Rules, 2004. But over time, doubts over the AERB's independence have remained. To address these issues, the Nuclear Safety Regulatory Authority Bill, 2011 was presented; however, it was never passed into law.

Attracting private investments in India's nuclear energy sector is significantly hampered by the lack of a strong, independent regulatory framework. Addressing this will involve a major reform of the AERB and maybe reopening the stalled Nuclear Safety Regulatory Authority Bill.

Potential Private Sector Participation Model

Owing to legal and regulatory constraints, Public-Private Partnerships (PPPs), in which the NPCIL or a comparable government body maintains majority ownership (51%) of nuclear reactors, represent one viable method of incorporating the private sector. Under this arrangement, the government would retain overall control and accountability while accepting financial and technological contributions from the private sector. A framework like this guarantees AEA compliance and is in line with current regulatory provisions.

Furthermore, by continuing to have a majority government ownership, these organizations would be subject to the 2005 Right to Information (RTI) Act, which would increase transparency. Mandatory disclosures under Section 4 of the RTI Act and Section 6 responses to public inquiries could guarantee public accountability.

Concerns About Liability

Managing the dangers of accidents is one of the main issues with nuclear energy. The catastrophic effects of nuclear accidents are brought home by the Chernobyl tragedy (1986) and the Fukushima Daiichi accident (2011). A "no-fault" liability system is required in India under the CLNDA, meaning that the operator is strictly liable for any nuclear accident. A further degree of complexity is created by the ongoing constitutionality challenge to the CLNDA, which has left open important questions about nuclear safety and compensation principles that the Supreme Court has not yet addressed.

The 2013 ruling in G. Sundarrajan vs Union of India and Ors., pertaining to demonstrations outside the Kudankulam Nuclear Power Plant, underscored the necessity for government agencies to conduct routine inspections, compile safety reports, and exercise due diligence. These decisions highlight how crucial strict regulations are in this area, especially when private companies are participating.

India's Aspirations in Nuclear Energy

The World Nuclear Association (September 2024) reports that India has suggested gradually increasing its nuclear energy capacity by 32 GWe. However, because of the inherent hazards and technical complexity of nuclear energy, this goal will require a considerable investment of finance as well as highly qualified resources.

Both the Union Budget plan and the NITI Aayog report stress how crucial private sector involvement is, especially when it comes to the R&D of cutting-edge technologies like SMRs and BSRs. Private investments, however, face difficulties due to the AEA's limitations and the continuing dispute concerning the CLNDA.

In summary

The road to private involvement in nuclear energy in India is paved with obstacles related to safety, regulations, and the law. The government's plan to allow the private sector to work on creating new nuclear technology is in line with the nation's energy decarbonization objectives, but major legal changes are needed.

To foster an atmosphere that encourages private investment, it is imperative to revisit the AEA's stringent regulations regarding the private sector's participation in research and development, make clarifications on the civil liability framework, and bolster regulatory oversight via an independent authority. The government maintaining majority ownership in public-private partnerships could provide a workable approach for overcoming these obstacles while guaranteeing accountability and safety.

India's goal to increase its nuclear energy capacity will ultimately depend on finding the ideal equilibrium between using the experience of the private sector and upholding strict regulatory restrictions to prevent mishaps and guarantee public safety.