The Government made huge efforts to secure membership of the Nuclear Suppliers Group (NSG) so that it is possible to make imports of uranium and access frontline nuclear power technologies. These efforts are welcome but there is also a need for caution.
Nuclear power is becoming expensive. The demand for compensation from affected people is rising. The other problem is that electricity is inherently expensive. Few new nuclear plants are being established nowadays. These plants can wreck havoc in case of a disaster as it happened at Chernobyl and Fukushima. The Fukushima disaster has forced the Government to enact a stiff liability law. Suppliers of components are to be held responsible in case of a disaster. The suppliers build cost in their quotations for the equipment. That makes nuclear power even more expensive. The cost increases further because power companies want to locate these plants near water sources that invariably lie in densely populated areas. Thus plants like Narora and Kudankulam have been established in densely populated areas on banks of the Ganga and the sea coast respectively. This leads to local opposition.
Nuclear plants and people compete for control of water sources. The way out would be to make these plants in less habited areas like Bidar in Karnataka and Pokhran in Rajasthan. But this would push up the cost once again. Despite these problems, nuclear power is the second best option for us after solar. The difficulty, however, is that we do not have adequate reserves of uranium in the country. Membership of the NSG will much reduce the problems of access to uranium and is, therefore, welcome.
Nuclear power is second best because of the steep reduction in the cost of solar power. The Government was able to buy electric power from new solar plants at a price of less than Rs 5 per unit recently. This is cheaper than all other sources of electricity including new thermal, hydro or nuclear plants. Sunlight is available in plenty in the Deccan Plateau and Thar Desert hence it also ensures our energy security. The Government has already embarked on a massive programme for promoting solar energy and must be congratulated for the same. The problem with solar is that it is available during the day hours only.
There are two possible solutions to this problem: to store solar electricity produced during the day and use it during the night. One way of doing this is to pump water from a lower reservoir to one located at a higher elevation during the day when solar electricity is available. Then the water can be released from the higher reservoir post sunset to produce electricity.
Another technology is to use day time solar power to superheat certain liquids and use the heated liquid to generate power post sunset. We can use daytime solar power in the night by the adoption of such technologies. Time-of-day pricing of electricity can also be introduced. Say the price of electricity for the consumer is Rs 6 per unit today. It can be provided that electricity consumed during the daytime will be charged at Rs 5 per unit while electricity consumed during the night will be charged at Rs 7 per unit. Then consumers will switch on their washing machines and geysers during the day rather than during the night. Industrialists will run factories during the day. In this way, the demand for power during the day will increase and will be supplied by solar power.
It is also necessary to reduce the consumption of electricity generally. It is seen that the standard of living is higher in countries that have a high consumption of electricity. Thus the Government is determined to meet all electricity requirements of people. There is a need to revisit this concept. It is indeed true that the standard of living increased much with the initial increase in consumption of electricity. Students are able to study at night, families can sleep comfortably under a ceiling fan, and the homemaker is able to charge her mobile phone and watch TV.
But the further increases in consumption of electricity do not bring forth as much improvement in the standard of living. The use of air conditioners and washing machines help but only in a small way. Therefore, we must strive to meet the basic needs of all citizens and try to reduce demand from upscale consumers. This objective can be attained by making a hugely progressive pricing of electricity. Consumption up to 100 units per month can be charged at Rs 4 per unit but consumption above 1000 units per month may be charged at Rs 15 per unit. This will lead to upscale consumers reducing their consumption without sacrificing much in the standard of living. The demand from these upscale consumers constitutes bulk of the domestic demand. Reduction of consumption by these will bring down the total consumption and enable us to meet our energy requirements from solar and nuclear power.
Thermal and hydro are not suitable for use because of the huge environmental costs. The price of domestic electricity today is around Rs 6 per unit. The actual cost of thermal and hydro electricity is about Rs 10 per unit if the environmental costs are factored in. People are not willing to buy large amounts of electricity at Rs 10 per unit. We pass the environmental costs to the people to keep the price of electricity low. That leads to increased demand of electricity. It forces us to produce more electricity and imposes even more environmental costs upon the people. This regressive cycle can be broken by increasing the cost of electricity to the upscale consumers in particular and using the additional receipt to compensate the affected poor people. This will reduce demand for electricity and enable us to meet the same without constructing more thermal and hydro plants.
Within nuclear power, we must move from uranium-based to thorium-based generation of nuclear energy. The latter technology is not fully developed as of now. China is expected to commission the first thorium-based commercial reactor soon. These reactors are more expensive than uranium-based reactors. Yet we must embrace them. Also, we must establish these plants in uninhabited areas.
The cost of nuclear electricity is high anyways. The additional increase by moving from uranium to thorium; and moving the location from habited to uninhabited areas must be borne because thorium is available in the country and our energy security will be established. The combination of solar, time-of-the-day pricing, progressive pricing, and thorium will make electricity available 24×7 and also ensure our energy security.
Author was formerly Professor of Economics at IIM Bengaluru
