Last week a pivotal step was taken in shaping the next phase of India’s nuclear journey — the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill, 2025, was passed by Parliament.

It consolidates and modernises India’s nuclear legal framework, enables limited private participation in the nuclear sector under regulatory oversight, strengthens statutory regulation by granting statutory recognition to the Atomic Energy Regulatory Board (AERB).

“It supports India’s clean-energy transition and the long-term objective of achieving 100 GW nuclear energy capacity by 2047,” according to the government.

The rationale behind this is to facilitate India’s energy transition process, according to policymakers. There’s a need to revisit the foundation of the country’s nuclear framework to match present-day needs and future ambitions. And with growing electricity demand, India needs to tap all resources available for generating uninterrupted power, this includes nuclear, they argue.

Also, to meet the national target of 100 GW nuclear capacity by 2047 and advance long-term decarbonisation by 2070, a modern legal framework is essential, which enables wider participation, leverages indigenous resources, and integrates innovation with safety, the policymakers aver.

Ankit Jain, Vice-President, Co Group Head-Corporate Ratings, ICRA Ltd, says it allows private companies to build, own, operate, and decommission nuclear reactors, including small modular reactors, which till now has been primarily done by Nuclear Power Corporation of India Ltd (NPCIL).

“This apart, the Government of India has announced allocation of ₹20,000 crore to set up a dedicated nuclear energy mission aimed at research, development and deployment of SMRs (small modular reactors) with a goal to operationalise at least five indigenously developed SMRs by 2033,” he said.

Fate of coal plants

All these sound good. While debates can happen on the nuances of SHANTI, what also needs to be considered is whether India’s electricity sector is ready for it? Cost and infrastructure are the key components here, knowing that end at the of the day it is the consumers who pay.

What happens to coal? As nuclear capacity grows under the SHANTI framework, it could result in speeding the retirement of old coal plants, especially non-pithead and high-tariff stations. With these units already costly and polluting, signals on converting select retired coal sites to nuclear make them natural candidates for faster exit or repurposing. But will the States where these projects are be willing to adopt it?

Once such coal stations shut, their existing transmission lines can be reassigned to upcoming nuclear plants, saving both time and grid-integration cost. Only short, dedicated links and switch-yard upgrades would typically be needed from the new reactors to the current pooling points, enabling quicker evacuation of nuclear power once they start generating. Therefore, infrastructure or grind connectivity may not be that much of a challenge.

Cost factor

What could be worrisome will be the cost of this energy. SHANTI makes nuclear power tariff more centralised, away from the usual State-level regulatory route. According to reports, a single national tariff framework is expected to give investors and States clearer price visibility and make long-term power purchase deals easier to structure. One will need to see how that evolves in the coming days.

Clause 37 (1) of SHANTI says, “Notwithstanding anything contained in the Electricity Act, 2003, the Central Government shall fix the tariff for supply of electricity from nuclear power plants based on such norms and mechanisms as may be specified by it by notification.”

It allows the Union Government to directly set nuclear tariffs using a notified formula, even if this means departing from the existing Electricity Act set-up. The formula can be a cause of concern if the process is not transparent. Ideally, the formula must factor in fuel costs, spent fuel and waste management, decommissioning and other lifecycle expenses, so these are reflected upfront in the approved tariff.

“The sector faces inherent challenges, including extremely high capital cost (₹16-20 crore per MW), long gestation periods, and plant stabilisation related issues. Private firms lack operational track record in this domain, raising concerns over execution risks and tariff competitiveness,” he said.

Says former Power Secretary Alok Kumar, “While it is a good move, we have to wait and watch, as the projects go to the States. The size of the project States are willing to offtake has to been seen? What kind of generation size and demand profile we are looking at will also play an important factor.”

The interplay of storage and demand flexibility options, and how they work will decide the overall system costs, he said, adding that the nuclear plants will have to have some flexibility. “Pushing one resource beyond a point may lead to a situation where another resource may have to be curtailed. How that will be managed also needs to be looked into,” he said.

Operator’s liability

While cost will have direct impact on the consumer, a worrisome aspect is capping operator liability in a graded manner based on reactor size; the amount is capped at ₹3,000 crore. Further, it removes equipment suppliers’ recourse for damages, in line with global norms.

While this addresses the deterrent for suppliers, what happens with the product is a challenge, critics argue.

“Nuclear projects are inherently highly capital intensive. Further, in India, so far the nuclear power generation rested with NPCIL, and thus private firms lack operational experience. This apart, frameworks for waste management, spent fuel, and decommissioning still remain in nascent stages,” Jain said.

In a nutshell, one will have to wait and watch for the rules that will define how SHANTI will be implemented.

Published on December 23, 2025