By Ashutosh Padelkar, Senior Research Associate
The Minister of Finance and Corporate Affairs presented the Union Budget for 2025-26 to the Parliament of India on February 1st. In addition to reforms to income tax and a new scheme to enhance agricultural productivity, the budget launched the Nuclear Energy Mission, to develop at least 100GW of nuclear energy in India by 2047 with a special focus on building Small Modular Reactors (SMRs).
As an external reference point, China has expanded its nuclear fleet from 19GW in 2014 to 53GW in 2023. Nuclear energy still met less than 5% of the total demand for electricity in China that year. It is further expected to add another 24GW of nuclear energy over the next decade, reaching 77GW by 2035.
Today, India’s installed nuclear energy generation capacity amounts to 8.2GW, setting the stage for an expansion of over 90GW in the next 22 years, or an expansion of 4GW per year for every single year until 2047. Relative to the achieved growth rate of 0.28GW per year for the last decade, meeting this target would involve scaling up the deployment rate by a factor of nearly fifteen.
This performance is not an indication of what could be achieved in the future, since the government has laid out steps to accelerate the development of SMRs and promote private-sector participation by reducing the liabilities for private developers to create a more conducive environment for investment in nuclear energy. SMRs and private capital both offer tempting avenues to break out of historical trends and rapidly accelerate the deployment of nuclear energy in India, so both measures merit consideration.
The government has allocated ₹20,000 crore ($2.2bn) to develop five indigenously designed SMRs by 2033. The International Agency for Atomic Energy reports that SMR costs between $2000-6000/kW, which could then support the deployment of 0.4-1.2GW of SMRs. The upper end of this range is consistent with a deployment rate of 0.15GW, less than 4% of the 4GW per year deployment rate envisioned in the target of 100GW. While there are operational SMR projects in several countries including Russia and China, the key barrier tends to be the challenge in successfully commercialising the manufacturing process to achieve economies of scale. The ambitious cost reductions in SMR costs rely on economies of scale through factory manufacturing of SMRs, which will be a challenge in India since a working prototype is yet to be built.
The other step was a commitment to amending the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to enable the deployment of private capital in nuclear power projects. There aren’t many global examples of successful private-sector investment in nuclear energy: Hinkley Point C, a 3.2GW conventional nuclear power project in England was being developed by EDF in partnership with the Chinese state-owned CGN. In 2023, EDF was nationalised by the French government. The next nuclear project in the UK after Hinkley Point C is Sizewell C, which is currently awaiting financial closure. After concerns about China’s involvement arose in 2022, the UK government bought out CGN’s stake in this project. Despite attempts by the UK government to raise private capital, including the introduction of a scheme that generates returns for investors even while the project is under construction – a measure which goes far beyond just dropping civil liabilities, investors are yet to be announced 18 months later.
The key blockers to private investment in nuclear energy are uncertain delivery times and a high risk of overspending. When the Jaitapur Nuclear Power Project was first announced in 2010, the construction was expected to start in 2018, but it has yet to begin due to ongoing regulatory approvals, environmental concerns and local opposition.
In summary, a significant expansion of SMRs over the next decade is unlikely, as is the deployment of private capital due to significant delivery risks. This does not mean that the ambition to scale up nuclear capacity in India is misguided – as the population and the economy both grow, nuclear energy has a critical role to play in ensuring resource adequacy by providing reliable, low-carbon energy. However, setting targets that are far in excess of what can be realistically achieved can be counterproductive. A fleet of 100GW nuclear power plants could produce 750TWh of electricity every year – setting this target could signal to private investors in other technologies including renewables that their investment could be crowded out by public capital not seeking attractive returns. More achievable and credible targets along with a credible mechanism to reach them, instead, would help build the confidence and stability that investors need.
Nuclear energy offers a reliable source of low-carbon energy, provides grid stability which is critical in renewables-dominated power systems, and creates tens of thousands of jobs during construction and thousands of jobs during operation. International examples demonstrate that there is currently likely to be little interest in nuclear energy from private investors. Consequently, public finance has a critical role to play in delivering these vital infrastructure projects. Instead of relying on relatively nascent technologies like SMR, or on private investors, taking a more active role in existing or proven technologies is far more likely to deliver the rapid expansion of nuclear capacity the Indian power system needs.
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