Regulatory Landscape for Small Modular Reactors in India

Reference Date \| Version	October 10, 2024 \| 1.0
Keywords	Nuclear energy, Small Modular Reactors (SMRs), Regulatory challenges, Licensing harmonization, SMR technology
Legislation(s)/Policies	The Atomic Energy Act, 1962 Foreign Exchange Management (Non-debt Instruments) Rules, 2019
Jurisdiction	India

India needs consistent and low-cost renewable energy to decrease the cost of production of nuclear energy. Expert guidance from energy legal advisors and infrastructure legal advisors is advisable to handle projects in these areas as an integrated approach would be required which needs to flow down to transaction and documentation structuring.

Introduction

India aims to achieve net zero carbon emissions by 2070. Therefore, it is necessary for India to diversify its clean energy portfolio to meet its population’s current and growing demands.

The projected all-India peak electricity demand (i.e., the instantaneous rate at which electricity is consumed at any given moment) and electrical energy requirement (i.e., the total amount of energy consumed over a specific period) are 277.2 GW and 1907.8 Billion Units for the year 2026-27 and 366.4 GW and 2473.8 Billion Units for the year 2031-32, respectively, as per the 20th Electric Power Survey (EPS) Demand projections.

Nuclear power promises a viable solution for diversification of the clean energy portfolio. Apart from being one of the lowest greenhouse gas emitters in life-cycle analysis, nuclear power also has the ability to provide baseload power and contribute to a stable and resilient electrical grid by providing a constant energy source. The country’s installed nuclear power capacity as of July 24, 2024, is 8,180 MWe, spread across 24 nuclear power reactors. The installed nuclear power capacity is projected to increase from 8180 MWe to 22480 MWe by 2031-32. [1]

With traditional large-scale reactors, there are specific challenges in requiring large-scale infrastructure investment for a long period and site requirements as aspects of geology, geography, and environment have to be considered. Precisely why Small Modular Reactors (SMRs) are becoming globally attractive.

SMRs can be traced back to the 1940s-50s being used in the military due to its design component. Countries like China and the USA have active programmes and policies dedicated to SMR design and technology development. In India, the Department of Atomic Energy is designing the 220MWe Pressurized Heavy Water Reactor (PHWR) to use a Bharat Small Reactor (BSR) for captive nuclear power generation and is also working on the Bharat Small Modular Reactor (BSMR) 220 MWe to use light water-based reactors.[2]

This article discusses the regulatory landscape for SMRs in India.

SMRs: Indian Context

Small modular reactors (SMRs) are nuclear reactors with a power capacity of up to 300 MWe designed with modular technology using module factory fabrication, pursuing economies of series production and short construction times. The name itself suggests the features of SMRs:

Small: The size of SMR is only a fraction of the size of a conventional nuclear power reactor. This offers a competitive advantage to SMRs, as land requirements are way less when compared to land requirements for large reactors.
Modular: SMRs and their components and systems are envisioned being produced in a controlled factory environment and then transported to the project site. This makes SMRs more affordable than large reactors, which often require customization as per the project site.
Reactors: Reactors harness nuclear fission to generate heat for the production of energy (in the form of electricity).

Unlike traditional Large Reactors (LRs), SMRs have a modular configuration, allowing for deployment in remote off-grid locations. These reactors have shorter construction timeframes and lower capital expenditures, making nuclear energy more affordable.

Currently, the SMR industry is in an evolution stage. India is taking steps to develop SMRs, with up to 300 MWe capacity, to fulfil its commitment to the clean energy transition. The government is exploring the options of collaborating with other countries and taking up indigenous development of SMRs. The provisions of the Atomic Energy Act of 1962 are being examined to allow the participation of the private sector and start-ups to promote SMR technology in the country.[3] It is imperative to note here that technology sharing and availability of funding are the two crucial links for ensuring commercial availability of SMR technology. As per the Energy Statistics India 2024 report, India’s share in the nuclear energy mix was 1.41% in 2022-23, projected to increase to 2.2% by 2032.

Regulatory Framework Surrounding SMRs

The Atomic Energy Act, 1962 (‘1962 Act’) provides for the development, control, and use of atomic energy for the welfare of the people of India, for other peaceful purposes, and for matters connected therewith. The Atomic Energy Regulatory Board (‘AERB’) was constituted in 1983 to carry out regulatory and safety functions as detailed under the Act.

The current legislative framework clearly states that only the central government has the power to produce, develop, use and dispose of atomic energy either by itself or through any authority or corporation established by it or a government company and carry out research into any matters connected therewith. Under the 1962 Act, a ‘government company’ means a company in which the central government holds not less than fifty-one per cent of the paid-up share capital.

‘Atomic energy’ presently falls under the sectors not open for foreign direct investment under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. Strategic partnerships are essential in the development and deployment of SMRs. However, the current legal framework is insufficient to facilitate such collaborations with private companies, academic institutions, and national laboratories.

The licensing process for nuclear facilities involves stage-wise consent throughout the lifetime of nuclear facilities, namely, siting, construction, commissioning, operation and de-commissioning.

The licensing process of SMRs will require conducting experiments and performing real-time modifications to address viability concerns. The industry lacks control and safety regulations, which hinders innovations and, in some cases, even compromises the safety of the general masses. The harmonization of the licensing process and regulatory requirements of SMRs is crucial for the speedy maturity of designs, reducing construction and installation time and optimizing overall costs. Harmonization in SMR licensing regimes is important to realize economies of serial production of SMRs to ensure their competitiveness and commercial viability. Harmonization can also be achieved in areas such as joint safety evaluations and SBD considerations for common technology types.

The levels of risks during phases in the project’s life cycle and associated risks are depicted below.

Image source: Report on the Role of Small Modular Reactors in the Energy Transition | NITI Aayog, last accessed: October 5, 2024.

Financing remains a challenge for the development of SMRs. There is limited private investment in the sector with a high degree of uncertainty in SMR costs (which is expected of new technologies under development and initial deployment). High investment costs, safety issues, long construction times, and nuclear waste management further continue to constrain private sector participation. Government support for research and development and initial funding for building and operating SMRs would be critical to instil confidence in future large-scale deployment of SMR technology.

Viewpoint

Nuclear power has long been met with scepticism due to societal reservations. Yet, the sector is experiencing a resurgence due to the growing need for cleaner energy alternatives. Like any nascent industry, the SMR industry also needs to overcome early challenges in technology, manufacturing technique, project funding requirements, and regulatory harmonization issues.

SMRs can be essential in mitigation efforts and strengthening the nuclear industry. They can accelerate the energy transition by facilitating greater penetration of nuclear energy as they possess attributes such as a low inventory of nuclear material per reactor, speedy fabrication through standardization, fast realization using modularization techniques, the feasibility of deployment at difficult sites and phased capital expenditure by adding successive batches of SMR modules. As many SMR designs are under various stages of research, development and licensing in different countries, global regulatory harmonization, developing the manufacturing ecosystem and bringing in public as well as private capital would be the key to the growth of the SMR industry.

To harness the potential of SMRs, considerations may be directed towards reducing dependency on imported uranium and exploring substitutes such as thorium to ensure long-term energy security.

The present structure or the lack of it, as discussed above, is challenging for the development of the SMR ecosystem in India. There is a pressing need to introduce a proper regulatory framework to facilitate the setting up SMRs, along with a single-window system for its approvals and licenses.

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