Nuclear power: What will it take for India’s private-sector gambit to succeed?

For the first time, the law opens the nuclear value chain – including power generation, equipment manufacturing and fuel-cycle services – to private players, while easing liability provisions that had deterred foreign suppliers and investors.

On paper, the reform strengthens India’s clean energy push at a time when large-scale private capital is essential to fund capital-intensive nuclear power projects. Its success, however, will hinge on building public acceptance, ensuring regulatory clarity and providing robust institutional support.

Green switch

With countries pledging to sharply cut greenhouse gas emissions and offset what remains by mid-century to keep global warming within 1.5 degree Celsius, nuclear energy is increasingly being seen as indispensable to the clean energy transition. Today, nuclear plants operate in more than 40 countries and supply about 9% of the world’s electricity, making nuclear the second-largest source of low-emissions power after hydropower and producing more electricity than wind, solar, or bioenergy individually.

Unlike wind or solar, nuclear power plants operate round the clock, providing stable electricity and heat without carbon emissions. This makes nuclear a natural complement to renewable energy, particularly as the rising share of variable renewables adds pressure on grid stability and large-scale energy storage remains expensive.

According to the International Energy Agency (IEA), reaching net zero emissions by 2050 requires the share of low-emissions sources, including renewables and nuclear, in global electricity generation to rise from 39% in 2022 to 100% by 2050. Under this pathway, global nuclear electricity generation would need to increase from about 2,700 TWh in 2022 to roughly 6,000 TWh by 2050.

Atomic presence

Advanced economies account for over 70% of the world’s operating nuclear reactors, and eight of the ten countries with the highest share of nuclear energy in their overall electricity generation fall in this group.

France stands out, with nuclear accounting for about 65% of its total electricity generation, reflecting decades of policy emphasis on low-carbon energy sources. Ukraine follows with a share of around 50%, driven by legacy Soviet-era capacity and energy security concerns. Switzerland’s 35% share highlights nuclear’s continued importance even in countries with ambitious renewable energy targets.

Elsewhere, nuclear plays a supportive rather than dominant role. The US operates the world’s largest nuclear fleet with 94 reactors, yet nuclear energy contributes less than 20% of electricity generation as natural gas and renewables have expanded rapidly. Japan, despite having a large nuclear fleet before the Fukushima accident, generated just 9% of its electricity from nuclear energy in 2023.

China and India sit at the lower end, at roughly 5% and 3% respectively, largely due to the dominance of coal and hydropower. This balance is likely to change as China hosts half of all nuclear projects currently under construction and is set to overtake both the EU and the US in nuclear capacity by 2030.

Investment intensive

Nuclear projects are characterised by a long, complex and extremely capital-intensive design and construction phase. Since 2000, the global average construction time for a nuclear reactor has been about seven years, stretching beyond a decade in several cases, particularly in Europe and the US. Even in South Korea, where earlier reactors were built in four to six years, the most recent projects have taken nearly a decade.

By contrast, utility-scale solar and wind projects are usually completed within two to four years, while gas-based power plants rarely take more than six years.

In nuclear projects, large amounts of capital are therefore locked in for extended periods without any revenue generation. This makes financing nuclear plants unattractive for traditional commercial investors, who typically prefer shorter investment horizons and quicker returns.

Moreover, nuclear projects often face cost overruns and construction delays due to the sheer scale and technical complexity of the plants, combined with particularly stringent regulatory scrutiny, safety standards and technological requirements.

The sensitive nature of nuclear energy also adds to political and regulatory uncertainty, reinforcing the need for strong public backing and risk-sharing mechanisms to make new nuclear investments viable.

State dominance

Given the high upfront capital costs, long construction timelines, and asset lives that can stretch close to a century when decommissioning and waste management are included, the global nuclear industry remains overwhelmingly dominated by state-owned utilities.

Since safety regulation and waste handling are core government responsibilities, state-owned enterprises operating under public oversight are often seen as better equipped to meet stringent regulatory standards. Backed by sovereign support, these entities are also better placed to absorb long payback periods and construction risks that private investors typically avoid.

In emerging markets and developing economies (EMDEs), virtually all utilities operating nuclear plants are state-owned enterprises, while in advanced economies commercial enterprises account for roughly half of installed capacity.

Notably, the US and Japan run much of their nuclear fleet through private companies under market-based structures. India’s nuclear sector is similarly anchored by the state-owned Nuclear Power Corporation of India Limited (NPCIL), which oversees reactor development, generation and operations.

Bold bet

India’s nuclear energy journey has been characterised by long periods of stagnation, with limited capacity additions over the past decade. Cumulative installed nuclear capacity rose from 4.8 GW in March 2014 to 6.8 GW by March 2017, and then remained virtually flat for several years, inching up to just 8.2 GW by March 2024.

Experts have long attributed these delays in capacity addition to the earlier legislative regime governing the nuclear sector. The Atomic Energy Act of 1962 reserved most nuclear activities for the public sector, while the Civil Liability for Nuclear Damage Act, 2010 imposed supplier liability provisions that discouraged foreign technology providers and investors.

Together, these constraints limited the pace at which projects could be financed and executed. High upfront capital costs, long construction timelines, and persistent community concerns around safety and land acquisition further compounded the slowdown.

The SHANTI law seeks to reset this trajectory by easing liability provisions and opening parts of the nuclear value chain to private participation, with the aim of mobilising larger pools of capital and technology. If effectively implemented, this shift will be critical for strengthening India’s net-zero pathways, where firm, low-carbon nuclear power will be needed to complement the rapid expansion of renewable energy.

Puneet Kumar Arora is an assistant professor of economics at Delhi Technological University.