India is considering nuclear energy via small modular reactors (SMRs) to meet the growing electricity demand of AI-powered data centres. 

• This follows global trends in countries like the US, where high-density computing infrastructures drive substantial power consumption.

What are Data Centres?

• Data centres are dedicated facilities that house computer systems, servers, networking equipment, and storage systems to manage, store, and process vast volumes of digital data.
• Applications: They power cloud services, host websites, manage enterprise IT operations, support financial transactions, and enable real-time communication, AI processing, and big data analytics.

Data centre growth in India

• Current market: $10 billion; revenue FY24: $1.2 billion.
• Energy cost contribution: ~40% of capital expenditure, 65% of operational cost
• Expected capacity addition: 795 MW by 2027 (total 1.8 GW)
• Cost of 1 MW setup: ₹60–70 crore

Small Modular Reactors (SMR)

• Small Modular Reactors (SMRs) are advanced nuclear reactors with a capacity ranging from less than 30 MWe to 300 MW(e)—about one-third that of traditional reactors. They generate significant low-carbon electricity. 

Key Features of Small Modular Reactors

• Small size: Small Modular Reactors are significantly smaller than conventional reactors, reducing construction and operational costs.
• Modular design: SMRs can be factory-assembled and transported to the site, streamlining installation and reducing construction time.
• Reduced land requirements: SMRs generate less nuclear waste and can be safely operated in existing industrial sites, minimising land acquisition challenges.
• Low reliance on critical minerals: SMRs require low-enriched uranium, which is more widely available than critical minerals used in other energy technologies.

Status of Small Modular Reactors

• Russia’s Akademik Lomonosov, the world’s first floating nuclear power plant that began commercial operation in May 2020, is producing energy from two 35 MW(e) SMRs. 
• High Temperature Reactor Pebble Bed Modules (HTR-PM) (China): A Demonstration unit, grid-connected in 2021, started commercial operation in 2023.
• Other Small Modular Reactors are under construction or in the licensing stage in Argentina, Canada, South Korea and the United States of America.

India’s policy and legal initiatives

• Civil Liability for Nuclear Damage Act, 2010: Amendments proposed to ease operator liability, addressing concerns of foreign vendors (e.g., Westinghouse, Framatome).
• Private sector participation: Enabling private companies and foreign investors to take equity stakes in nuclear projects.
• Alignment with Indo-US Civil Nuclear Cooperation: Potentially integrates SMRs into broader trade and investment agreements.

Implications

• Energy & technology: SMRs can underpin high-density computing hubs, enabling AI and cloud services expansion.
• Economic: Reduces energy costs for data centres, encourages private sector and FDI in nuclear energy.
• Environmental: Low-carbon alternative to fossil fuels, complements India’s climate commitments.
• Strategic: Positions India in the global SMR market and strengthens Indo-US nuclear collaboration.

Challenges Associated with Small Modular Reactors (SMRs)

• High Initial Costs: SMRs have lower long-term costs, but upfront development and licensing expenses are high.
• Wide Range of Capacities & Technologies: SMRs vary from <30 MW(e) to 300+ MW(e), leading to many technology alternatives. 
  • Too many options can hinder industry growth, create regulatory challenges, and reduce cost optimization.
• Manufacturing Infrastructure: Fully operational fabrication facilities for large-scale serial production of SMR components are not yet established.
• Public Perception and Acceptance: Concerns over nuclear safety and waste management must be addressed.
• Supply Chain and Infrastructure: A robust supply chain and infrastructure are essential for efficient construction.
• Regulatory & Safeguards Requirements: Need for a robust safeguards approach for novel SMR technologies, especially during receipt of nuclear material (NM).

The Way Forward for SMRs

• Standardization & Serial Production: 
  • Focus on designing standardized small reactors that can be manufactured repeatedly in quality-controlled factory environments using Industry 4.0 tools.
  • Serial production will improve the learning curve and reduce costs over time.
• Ecosystem Development:
  • Establish a robust SMR ecosystem for large-scale adoption; Standardized components and modules will aid wider deployment.
  • Update safety assessment methodologies for multi-module designs and emergency planning zones.
• Financing & Investment:
  • Ensure availability of low-cost finance, inclusion in green taxonomy, and use of innovative instruments like blended finance and green bonds to attract private investment.
• Skilled Workforce:
  • Develop a pool of skilled personnel across the SMR value chain: engineering, design, testing, inspection, construction, and commissioning.

DOWNLOAD PDF