The US and India have signed an agreement to build six nuclear power plants in India in a move that experts are saying has further reaching implications than just power generation.
Power analyst at Global Data Arkapal Sil says the agreement is aimed to boost the nuclear energy industry in both countries.
In the US, the nuclear power industry is saturated and dwindling, mostly due to huge project costs as a result of stringent safety standards.
In addition, the fall in renewable energy prices over the years has made it cheaper and more competitive, compared to conventional power in some cases.
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As far as India is concerned, the country aims to reduce coal-based power generation by increasing nuclear power, in an effort to achieve emission reduction with a clean and reliable base load capacity. Collaboration with the US also has political implications.
“Collaboration with the US in building nuclear plants can be seen as India’s tactics to avoid overdependence on Russia for its nuclear industry and have a diversified technology portfolio,” Mr Sil says.
“On the hindsight, the move also indicates an indirect check on the increasing Chinese influence in the South-Asian energy market, especially after the Gwadar port in Pakistan became operational in early 2018.”
India has seven nuclear power reactors with a cumulative capacity of around 5 gigawatt (GW) under various stages of construction.
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The country aspires for more nuclear power plants to achieve 21GW nuclear capacity by 2030 compared to 6.4GW in 2018.
According to GlobalData, the annual nuclear capacity and cumulative nuclear capacity in India is set to increase at a Compound Annual Growth Rate (CAGR) of 9.7 per cent and 10.5 per cent respectively during 2018-2030, while annual coal capacity addition is slated for a negative CAGR of 2 per cent over the same time period.
In addition, the NSG waiver granted in 2008 enabling nuclear trade with other countries, led India to envisage for increased nuclear capacity addition as import of advanced technology and fuel from other countries is no longer a hindrance in the path of its nuclear ambitions.