MEENU MOHAN
With the Union Budget 2024-25, nuclear energy has once again taken center stage, signaling a renewed focus on this vital energy source. Finance Minister Nirmala Sitharaman, in her budget speech, emphasized, “Nuclear energy is expected to form a very significant part of the energy mix for Viksit Bharat.” To achieve this vision, the government has laid out an ambitious plan to collaborate with the private sector in three key areas: establishing Bharat Small Reactors, advancing Research and Development (R&D) of Bharat Small Modular Reactors (SMR), and exploring new technologies for nuclear energy.
Ms Sitharaman specified that R&D funding announced in the interim budget will be made available for this sector. This policy update marks a pivotal moment in India’s journey towards energy security and sustainability, aligning with the global push for cleaner and more efficient energy sources. The commitment to SMRs reflects not just an investment in technology but a strategic move towards self-reliance in energy production.
What are SMRs?
The terminology of Small Modular Reactors (SMRs) is self-explanatory. They are ‘Small’, for they make up a fraction of the size of a conventional nuclear reactor. Typically, their energy generation capacity ranges from about 30-300 MWe. As per the International Atomic Energy Agency (IAEA) standards, this definition covers a broad range of micro and medium reactors. The term ‘Modular’ means that systems and components can be factory-assembled and transported as a unit to a location for installation.
SMRs are advanced reactors that harness nuclear fission to generate heat for electricity production or direct application. There are currently four SMRs in advanced stages of construction in Argentina, China, and Russia, and several existing and newcomer nuclear energy countries are conducting SMR research and development.
Bharat Small Reactors are nothing but the already in-use 220 MWe Pressurized Heavy Water Reactors (PHWRs) with minimal improvements. PHWRs are already installed in Narora (Uttar Pradesh), Rajasthan, Kakrapar (Gujarat), Kalpakkam (Tamil Nadu), Kaiga (Karnataka) and so on. However, introducing modularity to the same requires further studies, as mentioned in the Budget.
The Nuclear “Comeback”: Contextualizing the Emergence of SMRs
In the 1940s and 1950s, small-capacity nuclear reactors were initially developed for military purposes. With increasing nuclear anxiety surrounding the Cold War, the gatekeeping of enrichment processes, harrowing nuclear accidents, and denuclearization debates, research shifted to increasing capacities of existing power plants, improved waste dispersal and safety mechanisms, and effective enrichment.
Geopolitical Power Plays
The current geopolitical landscape, marked by de-globalization trends and civilizational clashes, is prompting many countries to reassess their energy sources. The Russia-Ukraine war and ongoing crises in the Middle East have fueled energy price volatility and heightened energy security concerns, leading to a renewed global interest in nuclear energy.
As India’s energy needs predominate its import requirements, energy security is vital not just for development, but to de-risk its economy from global price fluctuations and import dependencies. An energy-secure Indian economy is the closest it gets to being self-reliant.
Powering Remote Regions
The two main barriers to expanding energy access are the lack of grid infrastructure and the high costs of rural grid connection across the world. According to the IAEA, a single power plant, of any kind, should account for no more than 10% of the total installed grid capacity. SMRs can also be installed in remote off-grid locations. This could provide continuous power supply to the hinterlands and the resource-deprived areas. SMRs are also conceptualized in such a way that their Systems, Structures, and Components (SSCs) are manufactured in a controlled factory environment and then transported to the project site and installed to optimize the time and cost of the SMR project.
Features of modern nuclear reactors like a passive safety system like gravity flow of water instead of pumping, and the reduced size of the emergency planning zone are deployment advantages. Microreactors can be deployed in freshwater-deficit regions for desalination. SMRs offer flexibility, ease of construction and maintenance. They are suitable for cogeneration and non-electric applications in addition to installation in remote regions with less developed infrastructure. Energy can accelerate economic growth and development of the local community, which are essentials for a nation aiming at inclusive growth.
Arduous Ambitions of Net-Zero
The power sector accounts for 40% of global energy-related emissions and needs a complete revamp to achieve net-zero goals. As the world grapples with climate change, nuclear energy is experiencing a resurgence. A growing body of evidence indicates that nuclear power remains one of the lowest Greenhouse Gas (GHG) emitters in life-cycle analysis. The International Energy Agency (IEA) has projected the global nuclear-installed power capacity to more than double its capacity by 2050 in its Net Zero Emissions 2050 Scenario.
During the 26th Conference of Parties (CoP 26) of the United Nations Framework Convention on Climate Change (UNFCCC), India committed to expanding its non-fossil energy capacity to 500 GW by 2030 and achieving Net Zero by 2070. According to the IAEA, nuclear power saves 1 Giga tonne of carbon emissions annually.
A Viable Substitute for Conventional Energy
Currently, out of the total CO2 emissions of the energy sector, electricity generation contributes to 40% and the balance 60% comes from the use of fossil fuels in industrial process heat, heating in buildings, cooking, and transport. In a future where the reliance on fossil fuels and conventional energy sources is expected to decline significantly, nuclear power could play a crucial role in providing baseload power and maintaining grid stability.
Decommissioned or existing fossil fuel power plants and associated land assets can be repurposed into SMRs. These sites often offer pre-existent advantages such as rail connectivity, land and water availability, power evacuation infrastructure, and remote locations away from population centers.
A Beneficial Complement for Renewable Energy
Many of the current familiar renewables like wind and solar power have a tendency to be variable, depending on the time and seasons. Cogeneration SMR systems, apart from providing for both electricity and process heat requirements, have the potential to complement variable renewables through flexible operations.
Nuclear energy can also be a source for generating heat and hydrogen, along with electricity. Hydrogen has the highest calorific value of all known fuels and produces clean energy. Certain classes of SMRs fulfill the criteria for being an emission-free energy source and can also be used to produce hydrogen which supports decarbonization of hard-to-abate sectors of the economy. A multitude of applications including electricity generation, grid integration of renewables, process heat, desalination, and hydrogen production are opening up new avenues for deeper and accelerated adoption of nuclear technology. Thus, they can play a crucial role in achieving energy transition goals effectively.
Advantages
- Scalable
- Can be of varying capacities
- Adaptable
- Can repurpose existing power stations’ infrastructure, seamlessly integrate with renewables for flexibility and low carbon co-products
- Remote Refueling
- SMRs may require refueling at remote locations, enhancing operational flexibility.
- Transportable Reactor Units
- Fuelled reactors can be transported to the site, reducing on-site construction complexity.
- Factory-Based Commissioning
- Significant commissioning work is conducted in a controlled factory environment, improving quality control and efficiency.
- Remote and Autonomous Operation
- SMRs support remote and autonomous operations in surveillance, control, and testing, reducing the need for on-site personnel.
- Extended Refueling Intervals
- SMRs have longer refueling intervals, minimizing downtime and maintenance needs. This is typically 3-7 years, but can be as long as 30 years for advanced SMRs
Specific Benefits upon Comparison with Conventional Nuclear Reactors
While their working principles remain the same, the differentiating factor amongst nuclear reactors is how each reactor type approaches the safety function, overall simplicity, and cost of the plants.
| Criterion | Large Reactors | SMRs |
| Mode of Execution | Project mode, where modularity is partial | Product Mode |
| Frequency of Construction | At most one unit built every 3-7 years | Modularization helps increase the number of units |
| Workforce Mobilization | Temporary, time-consuming | Permanent with skilled workers deployed for an initial short period |
| Supply Chain Management | Discrete and project-based | Continuous and ongoing commercial relations for the ecosystem with multiple SMR units |
| Engineered Components | Very Large sized-equipments | Standardized sizes |
| Civil Design | Aspects of geology and environment must be taken into consideration | Standard designs with seismic isolation |
| Investment | Large-scale investment at national levels with long gestation periods before the realization of revenue streams | Smaller investment and shorter gestation periods |
| In-situ Work Component | Large site-specificity | Highly replicable |
Understanding the Barriers to SMR Deployment
SMRs are not expected to reach the commercial market until after 2030, and while they are anticipated to have lower initial capital costs per reactor, their economic viability remains unproven until they are deployed on a larger scale. Nuclear reactors are highly complex systems that must adhere to strict safety regulations, addressing numerous potential accident scenarios. The licensing process is lengthy and varies by country, indicating that standardization will be necessary for SMRs to achieve widespread adoption.
According to the Ecologist, “Every independent economic assessment finds that electricity from SMRs will be more expensive than that from large reactors…It’s highly unlikely that potential savings arising from standardized factory production will make up for those diseconomies of scale.” Additionally, a historical lack of investment and funding, coupled with high costs compared to renewables, further hampers progress.
Disadvantages
- Nascent Stage
- There are more than 80 designs and most of them are in the development stage (See figure below).
- Lack of Standardization
- Many SMR technology alternatives are available at present with varying requirements of supply chains, regulations, operations, etc. Large-scale commercial deployment needs prioritization of the technology used. Current nuclear reactor safety standards may fall short of addressing the unique safety needs of innovative SMR designs.
- Unresilient Supply Chains
- Geopolitical turmoil and concentration of research in a few nations make technological advancements exclusive and difficult to attain. These factors hinder collaborative efforts between countries.
- Viability Gaps
- High Initial Investment: Investors are often discouraged by general risk perception and the initial capital requirements being high. “The hardest challenge to overcome is economics,” says M V Ramana, the Simons Chair in Disarmament, Global and Human Security at the School of Public Policy and Global Affairs at the University of British Columbia, Canada, and author of The Power of Promise: Examining Nuclear Energy in India. “Nuclear energy is an expensive way to generate electricity.”
- Regulatory hurdles: New and innovative products can be difficult to get licensed. Additionally, liability regulations over civil nuclear reactors can deter foreign investments.
- Nuclear Waste
- De-localization of spent fuel due to the distribution of SMRs can be a cause of concern. However, countries with an already established nuclear program have set ways of dealing with waste, according to a Report on the Role of Small Modular Reactors in the Energy Transition by the Indian government’s think-tank NITI Aayog.
- Fewer Models in Operation
- According to the IEA, most SMRs are still in the development stage
- Public Perception and Engagement
- Opposition due to the potential consequences of a nuclear disaster, notwithstanding the low likelihood of such events.
The Way Ahead
Safety Standards
Technology readiness levels of existing SMR designs need improvements for consideration by utilities, investors, and governments for deployment. To accelerate their development, designers, operators, and regulators must strengthen safety analysis capabilities. The SMR industry, conventional nuclear sector, and regulatory bodies are actively working together to tackle licensing challenges and develop alternative solutions. The IAEA and other international organizations are supporting these efforts and promoting the harmonization of regulatory approaches.
Need for a Regulatory Roadmap
Currently, about 80 SMR designs are under development globally, with some being innovative and unlicensed, and others using modern manufacturing methods uncommon in the nuclear industry. To expedite SMR deployment, harmonizing the regulatory system is crucial. SMR stakeholders and international regulatory bodies are working to connect regulators, operators, technology vendors, governments, and policymakers to accelerate global harmonization of codes, standards, and licensing.
Fostering Private Participation
Private sector participation in SMR deployment can be fostered through several key incentives: political backing for SMR initiatives, a supportive regulatory framework led by national regulators, a well-established nuclear supply chain, and a successful proof of concept to boost investor confidence. Additionally, a clear Civil Nuclear Liability Framework and an effective energy policy with incentives for low-carbon technologies are crucial. Providing seed capital for innovation, funding for demonstration and commercialization, and financing for scaling operations are essential to the growth of SMR projects.
Alternative avenues for private investment in SMRs have emerged, particularly in Canada, the USA, and the UK, where technology vendors are attracting investment from non-traditional sources. High-net-worth individuals, often through family offices, provide early-stage financing, offering patient, risk-tolerant capital that traditional venture funds do not. While these investors seek commercial returns, their value-driven decisions allow them to accept higher risks and longer periods of illiquidity. However, this alone is not enough to propel the sector.
Engineering, Procurement, and Construction (EPC) firms play a pivotal role in later-stage development and construction. In the USA and UK, equity partnerships with EPC firms allow vendors to share risks and access equity from large firms’ balance sheets, facilitating the commercialization of SMR technology.
Incorporating Current Developments: Industry 4.0
Manufacturing SMR modules in a controlled factory environment are crucial for cost optimization, enabling the use of advanced industrial techniques not feasible at construction sites. Industry 4.0 has transformed modern manufacturing through the integration of technologies like Cloud computing, IIoT, AI, and ML, improving automation, control, and quality. To fully leverage these advancements in SMR production, the industry should adopt Industry 4.0 principles, including integrated command centers, real-time monitoring with analytics, AI-driven equipment health prognostics, system performance monitoring, safety and security, and asset digitization.
Micro-reactors
Microreactors can serve niche electricity as well as heat applications of the future such as powering microgrids and remote off-grid areas, quickly restoring power in areas affected by natural disasters, and also for seawater desalination.
Embracing Innovation with Caution for a Sustainable Future
Although SMRs offer potential benefits, their late entry into the market raises questions about their role in the urgent global decarbonization effort, with faster deploying clean technologies currently prioritized. However, since innovation is an ongoing process, investing in the same albeit risky, may pay off great dividends.
In conclusion, the integration of Small Modular Reactors (SMRs) into India’s energy landscape represents a strategic leap toward achieving energy security and sustainability. By emphasizing SMRs in the Union Budget 2024-25, the government is setting the stage for a transformative shift in how India meets its energy needs. SMRs offer significant advantages, including scalability, flexibility, and the potential to enhance energy access in remote areas, all while supporting the nation’s commitment to reducing greenhouse gas emissions and achieving net-zero goals.
References
About the Contributor – Meenu Mohan is a Research Intern at the Impact and Policy Research Institute, and holds a BSMS Degree in Mathematics from IISER, Bhopal. Her research interests include Data Analytics, Foreign Policy and Geopolitics, and Disarmament.
Acknowledgement – The author extends sincere thanks to Dr. Arjun Kumar for the invaluable opportunity, and to Sarah Ansari and Geetam Acharya for their informative inputs.
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