All-clear for 6 US nuclear-power reactors in coastal Andhra

The talks involved Foreign Secretary Vijay Gokhale and Andrea Thompson, US Under Secretary for Arms Control and International Security.

With the United States and India agreeing to set up six American nuclear power reactors in India, the decks have been cleared for Westinghouse Electric (WEC), which emerged from Chapter 11 bankruptcy protection last August, to initiate the sale of six AP-1000 reactors for a proposed project in coastal Andhra Pradesh.

The agreement follows two days of talks in Washington and comes in the backdrop of simmering trade tensions between the US and India.

In a joint statement Wednesday, the US and India said they had agreed to strengthen security and civil nuclear cooperation, including the proposal for building six US nuclear reactor units in India. The talks involved Foreign Secretary Vijay Gokhale and Andrea Thompson, US Under Secretary for Arms Control and International Security.

“They committed to strengthen bilateral security and civil nuclear cooperation, including the establishment of six US nuclear power plants in India,” the joint statement said. It gave no further details of the nuclear plant project. The agreement to build these reactors, announced in 2016, followed on from the Indo-US civil nuclear agreement signed in 2008.

Government officials indicated that price negotiations had resumed late last year after Pittsburgh-based WEC re-emerged from bankruptcy. In a bid to tide over the issue of high project costs — the biggest hurdle for US reactors — the Indian side focused on bringing down the interest burden to ensure that the price of Westinghouse’s AP-1000 series of reactors matches with the two new ‘VVER’ series reactor units being set up by the Russians at Kudankulam (Units 3 and 4), Tamil Nadu.

Since Westinghouse, earlier owned by Japan’s Toshiba, has traditionally sourced much of the equipment from Japan, the Indian negotiating side managed to get the US company to commit to continue sourcing components from Japan to get access to cheaper credit, thereby bringing down project costs and making the tariff competitive, officials indicated.

WEC employees around 11,000 people globally and is a flagbearer of the US nuclear sector, alongside the GE-Hitachi combine. WEC’s AP-1000 reactors and Russian state-owned company Rosatom’s VVER reactors are types of Light Water Reactors, where water is used both as coolant and moderator.

This pact also marks a full circle for India’s nuclear reactor technology, given that WEC’s new owner is a Canadian firm, Brookfield Asset Management. While Canada played a key role in India’s nuclear evolution, having supplied the Indian reactor CIRUS in 1954, the exports of nuclear hardware and uranium to India were stopped after New Delhi used Canadian technology to carry out a peaceful nuclear test in 1974.

Last April, WEC had got strong support from US Energy Secretary Rick Perry for its proposed India project. Even as discussions between the two countries have been on for over a decade to enable the sale of US atomic reactors, India nuclear liability rules, which apportion a part of the costs of any accident to be channeled to the manufacturer of the reactor alongside the operator of the station, had been seen as a hurdle by US companies.

WEC had filed for Chapter 11 bankruptcy in 2017 after design reviews of its new reactor by regulators and huge cost overruns in four nuclear reactors coming up in the US. In January 2018, Brookfield agreed to buy Westinghouse from Toshiba for $4.6 billion and this deal was approved by US and British nuclear regulators and the Committee on Foreign Investment in the United States (CFIUS) later last year.

In terms of pricing benchmarks, the two new Russian-design VVER-1000 reactor units (Kudankulam 3 and 4) to be set up in Tamil Nadu entail a sanctioned project cost of Rs 39,849 crore. This would translate into a cost of nearly Rs 20 crore per MWe (mega watt electric) as against the established benchmark of project cost of Rs 7-10 crore per MWe for existing nuclear projects based largely on the indigenous PHWR (pressurised heavy water reactor) technology. The cost of the WEC reactors is indicated to be around the pricing benchmark set by the Russian reactors.

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