Engineering and construction major L&T is looking at three times growth in revenue from nuclear energy as India gears up for expansion in the segment and other countries add to their capacities.
The company’s order inflows from the nuclear sector is increasing and in the next five to six years, majority of the business will be domestic, Anil V Parab, whole-time director & senior executive vice president (heavy engineering & manufacturing), L&T, told FE. Exports will also start picking up, he added.
L&T has a 55-60% market share in different segments of the nuclear energy value chain. However, he declined to share the current revenue from nuclear energy saying they are yet to make it public.
Last week, the country’s indigenously built 500 MWe prototype fast breeder reactor at Kalpakkam in Tamil Nadu attained first criticality — a key milestone before full power generation — marking the official start of the second stage of its three-stage nuclear programme.The government is looking to launch two more reactors of 500-600 MWe.
L&T Heavy Engineering manufactures reactor vessels for pressurised heavy water reactor and fast breeder reactor technology and critical equipment & systems for heavy water plants, fuel re-processing plants and plasma reactors. The country is looking to increase nuclear power generation capacity from 8.8 gigawatt to 22 GW by 2032, and 100 GW by 2047.
Parab said there will be changes with this growth. “First of all, there is going to be a change in this customer profile. The 8.8 GW primarily, it was one customer, that is DAE (department of atomic energy) and NPCIL (Nuclear Power Corporation of India). NTPC is another PSU which is entering the sector and many private players also will enter,” he said.
Beyond NPCIL
Of the 100 GW target, 54 GW will be done by NPCIL, 30 GW by NTPC and the remaining by private players, both domestic as well as foreign. And the private players may go beyond what is indicated, he said.
“In fact, nobody has the end-to-end capability including manufacturing of raw materials. So, obviously, when it (nuclear energy) is increasing exponentially, L&T will have very good opportunities within the domestic market,” he said.
He said they are in talks with global companies which operate power reactors of 1,000 MW and above for collaboration on projects in India as well as abroad. In small modular reactors, it has made small beginnings by supplying to small modular reactors and power reactors in the US, because they start as a qualifier for the supply chain and go on increasing their offerings, he said.
L&T was among the companies to tie up with Holtec of the US for small modular reactor (SMR) technology for India. The tie-up was for the heat exchangers for balance of plant. “We are now getting enquiries from them and we offered our quotations. So, these talks are actually a work in progress,” he said.
Parab said globally , nuclear strategy is driven by energy transition, exponential increase in energy demand due to data centres, artificial intelligence, and energy security .
“So, in all, nuclear energy fits the bill. Because of geopolitics, in the last five years post pandemic, you have seen how over dependence on one country, one source can destabilise your economy,” he said. More than 32 countries have committed that they will triple their existing nuclear power generation, he said, adding that is an opportunity for a company like L&T, because they have one of the largest talent pools across the world in nuclear energy. “And obviously, the cost effectiveness we bring on the table. So, there will be opportunities even in the export market,” he said.
Green Energy Gambit
He said goods and services tax (GST) on nuclear energy is 18% and on competing technologies like renewables, it is 5%. “So, there is an inherent disadvantage because nuclear energy has large capex requirement. The second issue is that India has not declared nuclear as green energy like in Europe, and other countries which have declared it as a green energy.”
Now, if the government recognises it, because this is the lowest carbon emitting technology, if they declare it as green, the segment will get the advantage of green bonds, Parab said .
Comparing how the government gave subsidies and other policy support to make solar energy products , LED lamps popular, Parab said the government should give similar support to the small modular reactor technology and products .He said nuclear energy plants can’t be set up like renewable projects.” Today, it takes a good amount of time to start, licence, construct, operate a plant, and obviously, the economics of that also has to be competitive to other forms of energy.”