In fact, the government’s tariff model makes nuclear power appear more competitive than it really is. The capital invested in any plant yields no returns while the plant is being constructed. At the end of construction, the government fixes a tariff by calculating a rate of return on the nominal amount of capital invested, disregarding the value this amount could have accumulated during this idle time. As a result, the effective rate of return on equity invested in nuclear energy is significantly lower than the rate of return provided by other sources of electricity that have shorter gestation periods. Nuclear power would be even less economically attractive if a methodology that consistently incorporates the time value of capital were to be used to establish tariffs.
While announcing its decision, the government claimed that these plants would “generate more than 33,400 jobs in direct and indirect employment”. But this number ceases to be impressive when viewed in the context of the planned capital expenditure of ₹70,000 crore. The relevant factor in assessing the employment opportunities provided by a project is not just the total number of jobs produced but the ratio of the jobs produced to the capital invested.
A widely cited study by three analysts from the University of California, Berkeley, found that nuclear power created only 0.14 job-years per gigawatt-hour of electricity produced. In contrast, solar photovoltaic sources were more than six times as labour intensive, creating about 0.87 job-years per gigawatt-hour of electricity. Since solar energy is cheaper, this comparison is even more unfavourable to nuclear power when viewed in terms of jobs created per rupee spent.