India’s decision to expand nuclear power capacity from around 8 gigawatts to 100 gigawatts by 2047 is one of the most ambitious infrastructure programs in the country’s history.

Achieving this target is expected to require investments of approximately ₹20,00,000 crore to ₹22,00,000 crore over the next two decades.

While much of the policy debate has focused on liability laws, reactor technologies and private-sector participation, the success of India’s nuclear ambitions will ultimately depend on whether it can build a financing architecture capable of mobilising capital at unprecedented scale and for sufficiently long durations.

The problem is not simply that nuclear power is presently expensive. It is that the financial ecosystem required to support such long-gestation projects has yet to evolve.

A utility-scale solar project in India typically costs around ₹3.5 crore to ₹5 crore per megawatt, while coal-fired plants require about ₹8 crore to ₹10 crore per megawatt. Large nuclear reactors, by comparison, can cost between ₹15 crore and ₹20 crore per megawatt.

Yet the headline capital cost tells only part of the story. Because nuclear projects typically require eight to ten years before generating revenue, financing becomes a critical determinant of project viability.

International studies suggest that financing costs can account for 30% to 50% of the levelised cost of nuclear electricity. The government’s roadmap for achieving 100 gigawatts of nuclear capacity by 2047 assumes a borrowing cost of around 9%, under which Interest During Construction alone accounts for nearly 15% to 20% of total project cost.

Every additional year of construction delay compounds financing costs, raising tariffs and eroding project economics. While any reduction in cost of capital has a positive effect on financing costs for the underlying generation technology, in the case of nuclear it may have a greater impact on affordability than marginal reductions in engineering or equipment costs.

Private investment will also depend on the underlying risk-return equation. Investors compare nuclear projects with renewable energy, transmission, battery storage and other infrastructure assets that often require lower upfront investment, shorter construction periods and lower execution risk.

If expected returns are broadly similar, capital naturally gravitates towards projects with lower opportunity costs and faster capital recycling.

Equally important is recognising that balance-sheet financing alone may not deliver a 100 gigawatt program. Even India’s largest public enterprises and industrial groups cannot indefinitely lock up enormous amounts of capital in projects that may take a decade before generating cash flows. At the scale envisioned, India would need to mobilise roughly ₹1,00,000 crore every year for more than two decades.

Nuclear projects may also require a larger viability-gap-funding envelope than solar, wind or battery storage because of their much higher upfront capital needs and construction risk.

Rather than relying on one-time budgetary support, viability-gap-funding could be combined with low-cost long-tenor loans, construction-period interest subvention, sovereign or partial credit guarantees, and post-commissioning refinancing. The objective should be to use public support to crowd in commercial capital, not replace it.

India today has insurance companies, pension funds and provident funds managing assets worth well over ₹1,00,00,000 crore, yet little of this long-term capital reaches nuclear infrastructure or green infrastructure more broadly.

A post-commissioning refinancing market through infrastructure bonds, InvIT-like structures or other long-tenor instruments could release bank and sponsor capital for subsequent reactors.

Construction risk also needs sharper allocation. Delays arising from changes in law, regulatory approvals or force majeure should not be treated like delays caused by weak project management or contractor underperformance.

Automatically passing all Interest During Construction to consumers weakens incentives for efficient execution. Costs should instead be borne by the parties best placed to manage them.

International experience offers useful lessons. France relied heavily on state-backed utility finance. South Korea combined utility finance with policy-bank support and standardised fleet construction. 

China has used state-owned utilities and banks alongside domestic manufacturing. India has already undertaken important regulatory reforms to enable wider participation and strengthen domestic manufacturing.

Financial innovation can reinforce these reforms. Existing instruments, public financial institutions, infrastructure bonds, credit guarantees, long-tenor lending, insurance and institutional capital provide a base that can be adapted rather than built from scratch.

Used in a coordinated manner, they can lower financing costs, recycle capital and make nuclear projects progressively more investable. India’s 100 gigawatt target, therefore, is more a financial innovation challenge.

Agencies