In a report, NITI Aayog stated that the availability of low-cost finance, green finance, and the inclusion of nuclear into the green taxonomy can enhance the economics of SMR projects
To attract private sector investment in setting up small modular reactors (SMR) to decarbonise India's energy industry, NITI Aayog has proposed attractive financing frameworks such as blended finances and green bonds.
The Aayog further proposed in a paper titled 'The Role of Small Modular Reactors in Energy Transition' that the availability of low-cost finance, green finance, and the incorporation of nuclear into green taxonomy can improve the economics of SMR projects.
"De-risking SMR projects and establishing attractive financing frameworks such as blending finance, green bonds, etc. is pivotal for incentivising private investors," it said.
According to the report, it has been observed that venture capital is a poor fit for the "hard" SMR sector.
SMRs are advanced nuclear reactors with power generation capacities ranging from less than 30 MWe to 300+ MWe, according to the International Atomic Energy Agency (IAEA).
"Hence, the public and private sectors must work together to identify alternative sources of early-stage finance," it said.
Noting that successful deployment of SMR technology requires private sector investment, the report stated that a robust and technology-neutral policy framework is required for securing private investment, including taxonomies and environmental, social, and governance factors.
The paper also stated that early implementation of a few demonstration plants for SMR designs can lessen the severity of risk perception, providing impetus for supply chain formation and bringing investment and stability to the industry.
It went on to say that adapting and streamlining licencing and regulatory frameworks to account for key SMR features is also vital for developing a global SMR industry.
While noting that existing nuclear safety rules are largely geared for land-based facilities and the unit concept of big reactors, the research proposed that these regulations and recommendations be adjusted for the concept of multi-module and flexible operation of SMRs.
"The nuclear regulatory framework should be comprehensive to allow various kinds of SMR technologies and designs," it said.
A pre-licensing vendor design review, according to the research, can aid in the early identification and resolution of possible technical or regulatory difficulties during the design phase.
According to the report, SMRs have emerged as preferred nuclear energy options when compared to large reactors because they require a low inventory of nuclear material per reactor, quick fabrication through standardisation, fast realisation, feasibility of deployment at difficult sites, and phased capital expenditure by adding successive batches of SMR modules.
"This makes SMRs an emerging technology to provide clean electricity, hydrogen and process heat. "SMRs can provide stable baseload electricity and have the capability to operate flexibly to support integration of variable renewable energy into the grid," it said.
Furthermore, these can be employed for non-electric applications such as desalination and district heating, whereas micro SMRs can provide both electricity and heat to people in remote regions.
According to the paper, half a dozen incentives can be used to stimulate private sector engagement in SMR deployment, including political support for the SMR effort, a favourable SMR regulatory environment headed by national regulators, and a mature nuclear supply chain.
"Streamlining of international nuclear liability conventions with the country specific legislation is required," the report said, adding that states may either amend domestic laws to include requirements and specifications of the international conventions.
In a life-cycle study, nuclear is regarded as one of the lowest GHG emitters.
Co-generation SMR systems, in addition to meeting both electricity and process heat needs, offer the potential to supplement fluctuating renewables through flexible operations. SMRs can also be placed in off-grid areas.
India has struggled with nuclear energy expansion, with large reactors like the one being built in Jaitapur with French assistance yet to take off.