Nuclear Reactors 377 - India Should Cancel Its Order For Six Westinghouse AP1000 Nuclear Power Reactors
There has been a lot of new lately about the deal being forged between India and Westinghouse for the construction of six new nuclear reactors in India. The India government really wants nuclear power to help with their chronic shortage of electricity. The U.S. wants to help Westinghouse sell reactors to other nations.
President Obama and India Prime Minister Modi met recently and issued a joint statement about the preliminary work on the contract for six of the new AP1000 Westinghouse reactors. The six reactors could cost up to forty billion dollars which would make it the biggest commercial contract ever between India and the U.S.
Critics of the deal complain that the selection of Westinghouse was based on executive decisions and not on regular market practices. The former head of the Indian Nuclear Energy Commission admitted that India had to consider the commercial interests of other countries and their companies. He said that India was obligated to buy these reactors from the U.S. in return for diplomatic support on international issues.
Other concerns have been raised about Westinghouse's financial problems. This year, Toshiba, the Japanese company that owns Westinghouse, announced that it was going to have to write down two billion three hundred million dollars of the value of Westinghouse. One of the main reasons for the write down was the fact that Westinghouse is having trouble selling its new AP1000 reactor design. Ten years ago, Westinghouse expected to have a dozen orders for its new reactor. Currently, only four reactors have been ordered. Florida Power and Light just delayed its planned purchase of two AP1000s for four years and the Tennessee Valley Authority cancelled their plan to buy two AP1000 reactors because of financial concerns.
Currently, two AP1000s are being constructed in the state of Georgia. The estimated cost for the two reactors is now about twenty one billion dollars. This works out to about one hundred and four thousand dollars per megawatt of capacity. The current capital costs of Indian domestic reactors is about fifteen thousand dollars per megawatt of capacity which puts the AP1000s way over the cost of constructing domestic reactors in India. The costs of electricity from the AP1000s in the first year could be as much as five times the cost of installed solar power systems. This just does not make any sense economically. In addition, considering the AP1000 reactors to be low-carbon sources in the fight against climate change works out to much more cost for lowering carbon emissions than green sources such as solar.
Indian concessions to Westinghouse have also drawn criticism. Indian has the most stringent industrial accident laws in the world that make equipment manufactures liable for accidents caused by their equipment. India just passed the Convention on Supplementary Compensation” (CSC) for Nuclear Damage law which is a direct contradiction of the earlier law. If there is an accident at one of the AP1000 reactors, it may be difficult to sue Westinghouse because of the new law and the grounds that Indian courts do not have jurisdiction over a multination corporation that is not based in India.
India would be well advised to cancel the purchase of the AP1000s from Westinghouse. This deal is just not beneficial to India.
