OPINION | Here’s how to unlock private money to fund India’s nuclear dreams

The aim is to complement Kudankulam nuclear plant with multiple small reactors powering industrial growth. (Source: commons.wikimedia/Reetesh Chaurasia)

Nuclear power, long viewed with caution due to its capital intensity and perceived risks, is now emerging as a critical component of the clean baseload energy mix. Today, the country operates roughly 8 GW of nuclear capacity today and operating at PLFs (plant load factor) above 85% (highest among all generation sources) with an inspiration to reach 100 GW by 2047, a twelvefold increase.

Nuclear currently contributes only around 3% of India’s generation mix. To scale this to 100 GW a significant role is envisioned for the private sector.

Through initiatives like the Bharat Small Reactor (BSR) programme, the government is actively encouraging industrial groups to co-create this nuclear future, not merely as passive vendors or EPC contractors but as developers, financiers, and long-term consumers of nuclear-generated power.

The BSR Framework: A new model of participation 

The BSR programme marks a policy breakthrough.

Recently, the Government has floated a Request for Proposal (RFP) inviting qualified Private Players to develop standardised 220 MW nuclear plants under a Construct-and-Transfer Model. As per the framework, the private developer finances, constructs, and commissions the plant, and upon completion, transfers ownership to NPCIL for Re 1.

In return, the developer receives guaranteed captive usage rights for 40 years and any excess power can be sold at tariffs determined by the Department of Atomic Energy (DAE).

Risks lie heavily on the private developer 

The early stages of a BSR project demand extensive regulatory compliance, from land acquisition and reclassification to securing State and Central Government approvals.

Despite guidance from NPCIL, the burden of these processes, both in time and financial risk, rests squarely on the private entity. Once construction begins, vendor selection is limited to NPCIL’s approved list, and delays in nuclear-grade equipment supply or civil works execution can extend timelines

Even after commissioning, cost responsibilities don’t disappear. The private developer reimburses NPCIL for all operating costs, including Heavy Water, fuel, O&M, and insurance. In addition, a nominal expertise fee is paid to NPCIL, currently set at Rs. 0.60/unit.

Ambiguities remain under this model

Crucially, all liabilities under Civil Liability for Nuclear Damage Act, 2010 in the event of an accident rest with NPCIL, but the cost of insurance coverage is borne by the private developer, typically ranging from Rs. 0.20–Rs. 0.60 per unit.

A major concern raised during pre-bid consultations is the absence of a fixed formula for pricing uranium and heavy water, leaving long-term operating costs unpredictable. Taxation risks are also significant. Any capital gains, GST, stamp duty, or other levies on the Re 1 transfer of asset are to be borne by the developer.

The methodology for determining the decommissioning levy and its future escalation has not been specified, creating uncertainty over long-term cost obligations. Likewise, O&M costs are passed through to the developer without any cap or predefined adjustment mechanism, leaving the developer vulnerable to higher expenses from operational inefficiencies outside their control. The absence of change-in-law protection further adds to the risk, as any new taxes, duties, or regulatory requirements would directly increase project costs.

For industrial sponsors, these uncertainties can be decisive in determining whether the project is financially viable and capable of securing stakeholder investment approval.

Charting a path to financial sustainability  

The biggest hurdle for private developers and their lenders is the lack of physical asset ownership. Since the plant is transferred to NPCIL for Re 1, there’s no asset to mortgage or hypothecate. This eliminates the primary security typically available in project finance transactions.

Moreover, the revenue model is based on internal captive usage, not third-party PPAs. This means there's no external, credit-rated buyer providing predictable cash flows. Instead, the value lies in cost savings and energy security for the industrial group, which lenders must then underwrite.

Lenders are expected to fund entirely on the back of long-term captive offtake requirements and the financial strength of the sponsor, rather than asset-backed security. Further, any replacement of the developer would require prior government clearance.

Bankable BSRs need an ironclad risk-sharing mechanism

To make BSRs bankable, risk-sharing mechanisms need to be embedded contractually from day one. A tripartite agreement between NPCIL, the developer, and lenders is essential.

Several structural enhancements could further strengthen bankability. These include introducing controlled substitution rights, establishing a pre-agreed termination compensation formula tied to certified project progress and outstanding debt (on the lines of NHAI Concession Agreements), implementing a debt-priority waterfall for early termination scenarios, escrowing the developer’s payment obligations, and defining clear change-in-law compensation mechanisms to protect against unforeseen cost escalations.

Considering that its non-fossil fuel, tapping in climate finance to provide blended finance solutions will lower the overall cost of capital, and catalyse greater participation from domestic lenders in what remains a strategically vital but structurally unique asset class.

The case for a dedicated financing vehicle 

If mobilising funds in the initial days are going to be difficult then then the government may need to establish a dedicated nuclear power financing entity, similar to IRFC in railways or IREDA in renewables. Such an institution could aggregate sovereign funds, multilateral credit lines, and private capital, absorbing part of the risk that commercial lenders cannot price.

This approach would accelerate a first of its kind program, standardise due diligence and documentation, and reduce transaction costs. Over time, a strong performance track record would build lender confidence, enabling broader participation in future BSR rollouts.

The Final Word: Building nuclear powered India, one BSR at a time 

A 220 MW BSR, operating at 70% PLF, can generate ~1,350 MU annually, enough to decarbonize a large steel plant, refinery, or data centre. With grid electricity prices expected to rise and regulatory pressures on emissions intensifying, nuclear captive power offers an insurance policy against volatility and carbon taxes.

India’s 100 GW nuclear vision will depend heavily on the effective rollout of the BSR programme. Its success will require the government to refine the framework where necessary, private developers to commit capital and operational expertise, and Lenders to adapt to a financing model that differs from conventional project structures.

If we get the structure right, the Rs 17 lakh crore investment envisaged can be a chain reaction in the true sense, igniting not just electrons, but capital, confidence, and carbon-free progress.

(Santosh Sankaradasan is EVP, SBI Capital Markets.)

Views are personal and do not represent the stand of this publication.