In the 1980s, there were about 400 nuclear suppliers and 900 nuclear-certified companies in the US. These have shrunk to fewer than 80 suppliers and 200 certifications.
The euphoria of the nuclear deal will soon die down and it will be time to deliver on the promise to supply electricity. The crucial problem of supply of uranium is said to have been resolved, but little has been said about the shortage of critical components for building new nuclear reactors worldwide. The problem starts with the heart itself - the reactor.
At present, countries investing in nuclear power programmes, except Russia, have to queue up at one foundry - Japan Steel Works - to place orders for their main reactor pressure vessel and its allied equipment. The vessel encloses the radioactive uranium fuel and the nuclear reactions happen inside it.
Two leading private agencies that track developments in the civilian nuclear industry - the World Nuclear Association and Bulletin of the Atomic Scientists - have warned it will be difficult to meet targets set for plant construction, upwards of 200 by 2030, if JSW continues to produce just five vessels a year.
"The supply challenge is not confined to the heavy forgings for reactor pressure vessels, steam turbines and generators. It extends to most engineered components and with escalating steel and energy prices there is a flow-on to plant costs," said Jeremy Gordon, Writer and Analyst, World Nuclear Association, when contacted by Business Standard.
"In the 1980s, there were about 400 nuclear suppliers and 900 nuclear-certified companies in the United States. These have shrunk to fewer than 80 suppliers and 200 certifications in recent years. Even if some of this is due to corporate takeovers, the decline is dramatic," said Mycle Schneider, an independent consultant, who is the author of the BAS 2008 World Nuclear Status Report.
The duo said that JSW order book was full till 2016, even before India has even planned its requirement. When contacted by Business Standard, a JSW spokesman, Kouji Tsutsumi, in an email response confirmed the backlog. "Yes. But we do not release specific figure."
It is said that buyers are paying a premium of $100 million for booking a reactor from JSW, but it could not be confirmed independently. No data is available on Russia's Rosatom and it did not respond to queries.
But, Tsutsumi said, "We are making capital investment to expand our capacity to 8.5 unit/year by the end of FY2010." But he confirmed that the company has no plans to collaborate with forging units around the world or setup facilities elsewhere.
UK-based Sheffield Forgers and India's Larsen and Toubro are planning to enter this field. Sheffield Forgers estimated the cost of adding a production facility at 150 million pounds (Rs 1,258 crore), while a spokesman for L&T said the company was willing to invest up to Rs 1,700 crore (Rs 17 billion) adjacent to its existing facility at Hazira in Gujarat and that it could be operational in three years.
Demand for India alone cannot spur production, at a time when there are doubts about the commitment to nuclear power from US and European governments, concurred both Gordon and Schneider, who said that plant construction around the world dropped from 10 a year before the Chernobyl accident to less than four a year at present.
They said even projects underway now are plagued by incessant engineering and financial delays. This was reaffirmed by Moody's in a report dated October 2007. It concluded that it believed many of the current expectations for nuclear were "overly ambitious", due to everything from lack of materials, manpower and poor credit ratings of power utilities.
Companies have thus been skeptical in planning investments, in spite of the surge in demand due to attempts to curb greenhouse gas emissions. L&T said though it was in discussions with major reactor makers like General Electric, Areva SA and Westinghouse, it will prefer to start with smaller components and forging reactor vessels will require commitment to an order book.
It refused to put a number on costs and production capacity. Also any company manufacturing nuclear plant components will have to get international certification and adhere to standards set by the International Atomic Energy Agency.
Nuclear Power Corporation of India Ltd, state-owned and India's monopoly nuclear power producer, is expected to get a fair share of new reactors. A spokesman for the company said it was aware of the shortage in availability of critical plant components but that it was an "opportunity" for local industry to benefit from it.