2016 is likely to be looked back on as a transformative year for nuclear power in India. Following years of isolation, the nuclear sector is poised for rapid growth. The government has ambitious plans and strongly supports nuclear power. India’s ratification of the Convention on Supplementary Compensation and development of the associated commercial infrastructure should support substantial foreign investment in India’s nuclear program over the coming decades.

1. Nuclear Energy in India
Overview, Opportunities, and Obstacles

2. Today’s eLunch Presenter
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Tyson R. Smith
Partner
+1 415-591-6874
trsmith@winston.com

3. Overview

4. History of India’s Nuclear Program
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1940 1950 1960 1970 1980 1990 2000
1974-2008
Primarily indigenous reactors brought online
1946 – Established Atomic
Energy Research Commission
1948 – Atomic Energy Act
1954 – Established Dept. of Atomic Energy (DAE)
1956 – First research reactor
1963 – Began construction of first commercial nuclear station
1967 – India announced it would not sign NPT
1973 – First heavy-water reactor
1974 – India tested first atomic weapon
1983 – Established AERB
2010

5. India’s Nuclear Industry
5
Civilian Nuclear
Regulator
Operator of Nuclear
Power Plants
Uranium
Fuel

6. Stable, Competent Nuclear Regulator
• Hierarchy of requirements
similar to the U.S.
• Published by AERB
• Addresses topics such as siting,
design bases, reactor safety, QA,
security, etc.
• Similar phases/approvals
• Environmental
• Siting
• Construction
• Excavation
• First pour safety-related concrete
• Erection of major equipment
• Commissioning
• High-quality program
• Reactive (e.g., post-Fukushima)
• IRRS Mission Findings
• AERB independence is next…
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7. Established Nuclear Power Program
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Station Type Units/MW
Tarapur
BWR
PHWR
2x160
2x540
Rajasthan PHWR
1x100
1x200
4x220
Kudankulam VVER-1000 2x1000
Kaiga PHWR 4x220
Kakrapar PHWR 2x220
Madras PHWR 2x220
Narona PHWR 2x220
Station Type Units/MW
Tarapur
BWR
PHWR
2x160
2x540
Rajasthan PHWR
1x100
1x200
4x220
Kudankulam VVER-1000 2x1000
Kaiga PHWR 4x220
Kakrapar PHWR 2x220
Madras PHWR 2x220
Narona PHWR 2x220

8. Sustained International Progress
• In 2008, U.S. and India entered into a Section 123
Agreement under AEA
• Obtained waiver from Nuclear Suppliers Group (NSG)
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9. Opportunities

10. Substantial Need for New (Clean) Energy
• Populous & Growing
• 1.3 billion people
• 1/6 of global population
• 1.25% population growth
• Youthful
• 50% below age 25
• Brownouts are common
• “Power for All”
• Double energy capacity by 2019
• Investment potential of >$220 billion in next 4-5 years
• Clean energy?
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186
25
42.7 42.8
5.8
0
50
100
150
200
Coal Gas Hydro Renewables Nuclear
Installed Capacity (2016) Gigawatts
Goal: Close
this gap

11. At Cusp of Major Nuclear Expansion
• 25% of electricity from nuclear
power by 2050 (currently, 3.5%)
• Multiple reactors under
construction
• Market estimated at $150 billion
• About the same as in China
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Station Type Units/MW
Rajasthan Unit 7 & 8 PHWR 2x700
Kakrapar Unit 3 & 4 PHWR 2x700
Madras (Kalpakkam) PFBR 1x500
2.6 3.8
6.8
14.6
63
0
10
20
30
40
50
60
70
2000 2008 2016 2025 2032
Nuclear Energy Capacity
(GWe)

12. 0
10
20
30
40
50
60
70
80
90
2006 2007 2008 2009 2010 2011 2012 2013 2014
Annual Capacity Factor
(Percent)
Already Benefitting from Access to Fuel
13
0
10
20
30
40
50
60
70
80
90
2006 2007 2008 2009 2010 2011 2012 2013 2014
Annual Capacity Factor
(Percent)
TVEL 2009 2000 MT
natural oxide
pellets
TVEL 2009 58 MT
enriched oxide
pellets
TVEL 2015 42 MT
enriched oxide
pellets
KAZ 2009 2100 MT
natural ore
concentrates
KAZ 2015
3750-7000
MT
natural ore
concentrates
AREVA 2008 300 MT
natural ore
concentrates
Cameco 2015
2750-5500
MT
natural ore
concentrates

13. Significant Foreign Investment Coming?
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14. Obstacles Remain,
But Solutions Here (or on the Way)

15. Right of Recourse Complicates Liability Law
• The Civil Liability for Nuclear
Damage Act, 2010
• Section 6 sets operator’s liability limits
• Section 17 gives operator “right to
recourse” against supplier
• Section 24 provides that supplier’s
liability limited to extent of operator’s
liability
• Section 46 channels liability to the
operator
• Survived legal challenges
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Strict
Liability
•Relieving victims of need to
prove fault or negligence
Exclusive
Liability
•Ensuring that the operator is the
only entity liable to compensate
for damage (even if caused by a
supplier or vendor)
Financial
Protection
•Covering the operator’s liability
•Ensuring funds are available to
compensate victims
Liability
Limits
•Limits in time and amount
•Enabling operator to set up a
cost-effective mechanism to
cover the liability amount
Single
Court
•Providing consistent treatment of
claims in the recognition and
execution of judgments
International Principles Indian Approach
Strict
Liability
•Relieving victims of need to
prove fault or negligence
Exclusive
Liability
•Ensuring that the operator is the
only entity liable to compensate
for damage (even if caused by a
supplier or vendor)
Financial
Protection
•Covering the operator’s liability
•Ensuring funds are available to
compensate victims
Liability
Limits
•Limits in time and amount
•Enabling operator to set up a
cost-effective mechanism to
cover the liability amount
Single
Court
•Providing consistent treatment of
claims in the recognition and
execution of judgments

16. Strong Gov't Support for Resolving Issues
• Efforts to assuage supplier
concerns
• U.S.-India announce
“breakthrough” on liability
• Ministry of External Affairs
publishes answers to FAQ
• India ratifies the Convention on
Supplementary Compensation
• Bilateral agreements
• Nuclear Insurance Pool
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17. Critical Commercial Infrastructure in Place
• 27th global nuclear insurance pool
• 1500 crore rupees (per CLND)
• Approximately $226 million USD
• Policy for operators and suppliers for
third party (public) nuclear liability
• Nuclear Operators Insurance Policy
• Nuclear Suppliers’ Special Contingency
• First insurance policy for “right of recourse”
unveiled by India Nuclear Insurance Pool in
August 2016
• Commercial infrastructures now largely in
place
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Tier 1 Operators
Tier 2
Turnkey
Suppliers
Tier 3
Other
Suppliers

18. Financing Necessary from Multiple Sources
• Export Credit Agencies
• U.S. Ex-Im Bank negotiating loan for
Westinghouse projects
• But, no quorum to approve loans
• Congress holds keys to resolution
• Other Ex-Im Banks may have role, too
• Efforts to address NPCIL financial
limitations
• Feb. 2016 law permits NPCIL to enter into JV
with other PSUs
• No private ownership or direct foreign
investment (yet)
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19. NSG Waiver Sufficient, But India Wants More
• 48-country NSG granted waiver to India in 2008
• India seeking full membership
• Would ensure India’s exports subject to same rules as others engaged
in international nuclear trade
• Filed application to join NSG based on substantial progress, including:
• Civil-military separation
• Safeguards agreements with IAEA
• Adherence to NSG trigger
and dual-use lists
• Would support achievement of
COP-21 objectives
• But, opposed by others,
including China
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20. Summary

21. Takeaways
• Established nuclear industry and stable regulatory regime
• Demonstrated need for new nuclear generation
• Increasing energy demand
• Transitioning to “cleaner” energy production
• Strong government support for new nuclear
• Steady progress since 2008
• Creating appropriate conditions for making investment decisions
• Regulatory and commercial infrastructure in place
• International agreements
• Liability and insurance issues on path to resolution
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22. Thank You.
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Tyson R. Smith
Partner
+1 415-591-6874
trsmith@winston.com