Power ministry seeks green energy status for nuclear power

As India finalises the rules and regulations under the SHANTI Act for private entry into civil nuclear power generation, Power secretary Pankaj Agarwal has reached out to the Department of Expenditure to accord green energy status to nuclear power.

Agarwal has recently written to the expenditure secretary that nuclear should be included in the national green taxonomy to ensure bankability and attract climate finance. The Department of Atomic Energy (DAE) made similar requests a few months back, seeking a series of fiscal and non-fiscal incentives for the industry looking to venture into nuclear power.

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Sandeep Raj, Joint Secretary and Financial Advisor, DAE, said an internal committee of DAE has given suggestions to the Department of Expenditure for inclusion of nuclear in green taxonomy.

“We had a meeting with very senior functionaries of the Department of expenditure, and they felt that even if, for various reasons, nuclear is not coming under green, it should not in any way affect the cost of borrowing. So even if it (the Department of Expenditure) doesn't classify (nuclear) in the green taxonomy, everybody knows that nuclear is one of the cleanest,” said Raj, speaking at an industry event.

Current green finance frameworks -- the Sovereign Green Bond Framework, RBI green deposit rules, and SEBI green debt securities -- explicitly exclude nuclear power as it is not included in the national green taxonomy.

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Low-cost capital

European Union has included certain nuclear activities in the green taxonomy. Raj said probably Korea is the only country where nuclear comes under green, world over it is treated as red.

“It is a baseload fuel which causes the least pollution. So at least for cost of borrowing, if there is some requirement like some notification needs to be done, we should be following that so that capital is available at lesser cost,” he explained.

The DAE has sought that GST on nuclear be reduced from 18% to 5%, to make it at parity with the renewables like solar. It also included a mandate for a purchase obligation in nuclear power on the lines of solar.

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“We had a lot of interaction with stakeholders, and there are a lot of suggestions regarding viability gap funding. So I also feel that we are trying for it and maybe we'll also come up with some sort of incentive, I mean, based on indigenization, based on cost of construction. There will be some incentives, both fiscal as well as non-fiscal, in the offing for the industry players,” he said.

The industry says, keeping in mind the long gestation period of nuclear power with high cost of capital and delayed return on capital, the government needs to give green energy status to nuclear.