AECL in talks with Indian power firms

NEW DELHI, INDIA - As India and Canada get ready to sign a nuclear cooperation pact, Atomic Energy of Canada Ltd, or AECL, is in talks with three private sector Indian power generation companies, including Anil AmbaniÂ’s Reliance Power Ltd, for setting up nuclear power generation plants based on its Candu (Canada Deuterium Uranium) reactor.

The Candu pressurized heavy water reactor technology, developed by Canada and currently meeting around 16% of that countryÂ’s electricity demand, is marketed worldwide by AECL. India has developed expertise in the whole lifecycle of a nuclear program, including life extension of pressurized heavy water reactors.

“We are in talks with three Indian private sector firms who have plans to set up nuclear power projects,” said Hugh MacDiarmid, president and chief executive officer of state-run AECL, on his recent visit to India. “There is mutual synergy between our markets.”

He declined to name the three companies.

A person familiar with the development, who did not want to be identified, confirmed preliminary talks between AECL and Reliance Power. Reliance Power chief executive J.P. Chalasani declined to comment.

As per the current policy guidelines in India, atomic energy is exclusively reserved for the Centre. Nuclear power plants can be set up only by Nuclear Power Corp. of India Ltd, a public sector company under the department of atomic energy.

This will change as part of the planned opening up of the sector following the civilian nuclear energy agreement with the US, freeing up overseas companies to enter the country.

“The private sector is doing the preparatory work. As contractors they have come in quickly, but as developers they will take some time. For that the present laws, rules and regulations need to be changed,” said Anish De, chief executive at Mercados Asia, an energy consultancy firm. “Reliance Power has been at it for the last few years. However, the timing will depend upon the change in regulations.”

The participation of the private sector and other PSUs is expected to increase with the expected changes in the legal and policy framework, the effects of which will only be visible by 2019.

The participation of private firms is expected to give a boost to the sector once the government frees up atomic energy. Private sector power firms such as Tata Power Co. Ltd, GMR Energy Ltd, Jindal Steel and Power Ltd, JSW group, NTPC Ltd, Vedanta Resources Plc and Reliance Power have earlier evinced interest in setting up nuclear power plants once this takes place.

AECL is seeking opportunities in the Indian market, given the significant demand for electricity in the country and its inability to sell a single reactor in the last 10 years. Out of IndiaÂ’s installed power generation capacity of nearly 150,000 MW, nuclear energy accounts for only 4,120 MW, even as it tries to close the gap between galloping demand and deficient supply.

According to the India Energy Outlook report by audit and consulting firm KPMG, the department of atomic energy hopes to build 250,000 MW equivalent of nuclear power capacity by 2050 to meet the countryÂ’s long-term electricity requirements.