The department of atomic energy (DAE) will ensure that the cost of electricity generated by the Jaitapur nuclear power plant doesn't exceed Rs.6.50 per unit when it negotiates the price with France's Areva SA, the technology partner and contractor for the 9,900 megawatts (MW) nuclear power project in Ratnagiri district of Maharashtra.
The department expects to complete negotiations with Areva at the earliest, R.K. Sinha, secretary of DAE and chairman of the Atomic Energy Commission, said without giving a time frame for the conclusion of negotiations.
Sinha was speaking to reporters on the sidelines of the India nuclear energy summit in Mumbai, an annual nuclear industry event co-hosted by the DAE.
A memorandum of understanding on the project was signed between Areva and Nuclear Power Corp. of India Ltd (NPCIL) in 2010, during then French president Nicolas Sarkozy's India visit.
The first 1,650 MW reactor of the project is expected to become operational around 2020-21.
"Our mandate from government is very clear, the government wants power produced from Jaitapur nuclear power project comparable with other conventional sources of power, in its first year of operation and we are working towards achieving that goal," Sinha said.
The price of coal-fired power in India is expected to be around Rs.6.11 per unit in fiscal 2019, up from around Rs.4.20 in fiscal 2012, according to a 2012 report by the consulting firm KPMG.
"The task of generating power at Rs.6.50 per unit from Jaitapur power plant is quite achievable but it will depend on cost of insurance and the size of indigenous component in total contract," said Robinder Sachdev, president of New Delhi-based think tank The Imagindia Institute, which carries out research on policy issues related to nuclear energy.
"NPCIL and Areva should prepare a proper index based on weighted average of each component of the contract like cost of equipment, cost of insurance, cost of debt, currency volatility among others. This will free both parties from constraint of carrying out negotiations within the set of pre-determined numbers and provide more flexible framework, which will be beneficial to both parties."
Vivek Monterio, a physicist and convener of Konkan Bachao Samiti, was sceptical about the DAE's claim of keeping the price of nuclear power low.
"Another French government company, EDF SA, signed a contract with the British government to build a nuclear power plant based on Areva's technology called European Pressurized Reactor at a place called Hinkley and cost per unit of this plant, if converted to Indian rupees, works out to be Rs.9.20 per unit and this plant is also expected to become operational in 2020," said Monterio.
"So, we will like to know on what basis DAE and NPCIL are claiming that the cost of power generated from Jaitapur is going to be around Rs.6.50 per unit. They must reveal what is a per MW cost of the Jaitapur power plant likely to be."
NPCIL and DAE are also not revealing the cost of storage and reprocessing of spent fuel, cost of security and cost of decommissioning the plant at the end of its life cycle, Monterio said.
"If all these costs are added, nuclear power will never be an economically viable option," he claimed.