The U.S. is looking beyond its shores, including at the Westinghouse deal with India, to revive an industry that is not doing as well as its supporters project

The future of energy is nuclear — so goes a pithy one-liner meant to promote this multibillion dollar industry in the United States, considered a world leader in the field from the standpoint of its safety record and export of high technology equipment. That promo by the Nuclear Energy Institute, a U.S. think tank-cum industry lobby, would sound logical considering that energy shortages are affecting millions of people, both in the developing and developed world. This lobby would have us believe that a new wave of construction nuclear plants will begin after 2020, depending upon the success of the handful being built now.

Reality is different

The reality is different. The graph of nuclear power generation is headed downward. According to David M. Farr, Director of the Atlanta Centre of World Association of Nuclear Operators (WANO), though it would be wrong to sound the death knell for the industry, the fact remains that between two and five nuclear energy units may close down within five years. Two units of the San Onofre plant in California and one unit (550MW capacity) of the Wisconsin plants are presently being shut down as the cost of replacing the outdated or damaged equipment simply does not make commercial sense.

At present, only five nuclear power units are under construction — two each in Vogtle and South Carolina and one in Tennessee.

Nobody in the U.S. is talking of building large new nuclear reactors costing $8 billion apiece. Rather, the way forward could be small and marginal reactors costing half that amount. In fact, the Westinghouse-led consortium is manufacturing 23 reactors in China, in an apparent attempt to rein in costs.

A variety of reasons — which India is watching closely — are responsible for the U.S. nuclear slowdown, a significant one being the absence of subsidy as in Russia and India where the industry is totally in the public sector.

The turning point for the nuclear power industry was the Three Mile Island accident in March 1979 which triggered a plethora of controls, rigorous licensing systems and a complete rethink about the way the U.S. looks at nuclear energy. For instance, the combined construction permit and operating license (COL) for a plant can take up to 10 years now. With safety and security reaching the point of obsession, most of the 100 plants in the country today are those that were licensed in the 1960s and 1970s.

Other energy sources

No less is the challenge being posed by the discovery of huge reserves of natural gas estimated at 24.4 trillion cubic metres (TCM). Its price has fallen from $8-12 to $2-3 per mmbtu (million metric British thermal units), a cost that makes nuclear power uncompetitive, though shale gas production is encountering issues of safety and environmental protection. “We are a dirty America,” said Mr. Warr, adding on a more serious note that the U.S. did not want to place all its eggs in one basket — either nuclear, natural gas or coal. Its best bet in the unfolding energy scenario was to spread its resources.

Storage

An already complex situation in the U.S. has been compounded by the lack of consensus on how to store 68,000 tonnes of spent fuel lying in concrete casks on the premises of nuclear plants. Worse still, this quantity is increasing by 2,000-3,000 tonnes every year. Although a sum of $28 billion is available in a trust fund created to tackle this problem, a move to store the fuel in a repository in the Yucca mountains in Nevada State failed. The failure is blamed on politics. While U.S. President Barack Obama has since constituted the Blue Ribbon Commission to recommend ways to store/dispose of nuclear waste, it may take decades to translate the proposals into action.

These issues naturally make Americans look beyond their shores to market nuclear power equipment, especially the AP1000 unit being built by Westinghouse in China. It has a unique design for safety mechanisms to kick in even if auxiliary power fails as it happened at the Fukushima Daiichi plant in Japan. India is obviously seen as a huge market for these reactors.

Liability Act

During U.S. Secretary of State John Kerry’s India visit earlier this year, the American side barely hid its disappointment over the slow pace of progress in reaping the benefits of the India-U.S. civil nuclear energy deal. On top of this, there is the Nuclear Liability Act — though criticised for being subsequently diluted under U.S. pressure — which holds the equipment and fuel supplier liable to pay damages in the event of an accident.

Yet, as international diplomacy has to factor into India’s domestic compulsions, the joint declaration just said that over the past year, negotiations leading to the construction of nuclear power plants in Gujarat (Mithivirdi) and Andhra Pradesh (Kovvada) have continued with notable progress being made in land acquisition. The U.S. Nuclear Regulatory Commission would assist India’s Atomic Energy Regulatory Board (AERB) to certify and licence the operations in India of U.S.-origin nuclear power plants.

What does all this mean to India where power shortage for 2013-14 is estimated at 6.7 per cent but where there is stiff public resistance to new power plants? Is the U.S. fazed or frustrated by these developments in the attempts of its companies to push reactor business, more so after the two countries signed the 123 nuclear agreement some years ago?

Hardly, says Dick Stratford, Director, Office of Nuclear Energy, Safety & Security at the U.S. Department of State. “Issues need to be resolved. I wouldn’t say we are frustrated but the U.S. Government and suppliers want progress.

The French too have problems with the Act as it pushes up the price of construction … as do the Russians. The latter, however, say that existing agreements with India insulate them from liability. We are engaging in a dialogue with India,” he said. Stratford is a key figure in the U.S. nuclear think tank which was at the centre of discussions with India on the nuclear deal.

Other officials are more blunt in their opposition to the Act for several reasons. It will push up the cost of power; the suppliers, including Indian, will be made liable to pay millions of rupees for a long period for faulty equipment that cost just a few hundreds of rupees, and lastly, the liability fixed is well above the guidelines laid down in the Vienna convention. It is the plant operator and not the supplier who should be made liable, they say.

On a broader plane of India-U.S. relations, American officials say that they do not see the liability Act and issues like the slowdown in FDI as stumbling blocks. “Our cooperation is deeper and goes much beyond nuclear issues. We have 30 dialogues going and six working groups, across the spectrum. Bilateral trade is now $100 billion which the U.S. wants to increase fivefold in 10 years,” an official told a group of visiting Indian visiting journalists against the backdrop of Prime Minister Manmohan Singh’s visit to the U.S. in September.

Against this web of nuclear energy-related issues, the leak of radiation-contaminated water at a damaged plant at Fukushima Daiichi recently raises new safety questions because the U.S. nuclear establishment has been fully engaged with Japan in containing the fallout of the tsunami-triggered disaster since 2011.

nageshkumar.s@thehindu.co.in

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