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Meltdown-or-Not Future for Nuclear Seen in Diminutive Reactors

Jose Reyes, nuclear engineer and founder of Nuscale
Jose Reyes, a nuclear engineer, poses on a 1/3 scale model of a Nuscale Power Inc. nuclear reactor at a test facility in Corvallis, Oregon, U.S., on Feb. 11, 2011. Photographer: Robbie McClaran/Bloomberg Markets via Bloomberg

April 13 (Bloomberg) -- Nuclear engineer Jose Reyes jolted awake at 4:45 a.m. on March 11 when his son called to warn him that a massive earthquake had rocked Japan and unleashed a tsunami. Giant waves were heading for the Oregon coast, about an hour from Reyes’s Corvallis office.

As news poured in during the next 12 hours that the cooling system at a Tokyo Electric Power Co. nuclear plant had been damaged, Reyes’s anxiety grew. People were using the words “potential meltdown” with alarming frequency.

Reyes, 55, who founded NuScale Power Inc. in 2007 to design a slimmed-down, 45-megawatt reactor, contemplated the blot on the already beleaguered nuclear industry -- and the prospects for his nascent company, Bloomberg Markets magazine reports in its May issue.

“We’ve been hard-pressed but not crushed,” he says. “Stopping the progress being made would be a mistake.”

Based on the conviction that today’s large nuclear projects are burdened by too much financial risk, NuScale is designing and testing a 60-foot-high reactor encased in a thermos-like metal sheath. It would cost about $200 million and could be used to light and heat villages, desalinate ocean water or be strung together side by side to form a midsize power plant -- virtually free of carbon emissions. With some investors on board, Reyes plans to ask the U.S. Nuclear Regulatory Commission for a license in late 2012.

“More and more people see small nuclear as a green technology,” he says.

Nuclear Revival

Decades after accidents at Three Mile Island and Chernobyl poisoned attitudes and the environment, Reyes and a cadre of scientists, engineers and investors are betting that small-scale reactors can spark a nuclear revival.

Hyperion Power Generation Inc. in Santa Fe, New Mexico, is working on 25-megawatt, refrigerator-sized designs for $50 million each that could power remote locations or be used in hospitals and factories. By 2020, Russian nuclear company Rosatom Corp. expects to sell seven barges equipped with twin 35-megawatt reactors for the Arctic and Africa. In Argentina, the government of President Cristina Fernandez de Kirchner is clearing ground in the central grasslands for a 25-megawatt prototype planned for 2014.

Microsoft Corp. co-founder Bill Gates is backing a more powerful, 500-megawatt reactor designed by TerraPower LLC in Bellevue, Washington. Its traveling-wave technology uses uranium-238 to fuel a reaction in what functions like a 13-foot-tall candle.

‘Valuable Offering’

“If it works, it’s hard to think of a more valuable offering in the energy space,” says Izhar Armony, a partner at Waltham, Massachusetts-based Charles River Ventures, which invested in TerraPower.

As improbable as it may sound amid the devastation in northeastern Japan, the nuclear accident may increase the appeal of innovative, small-scale reactors, says Chris Gadomski, a Bloomberg New Energy Finance analyst in San Francisco.

“We’re seeing a knee-jerk reaction saying, ‘get rid of nuclear,’ but that’s not going to happen in the long run,” he says. “There is no other good solution if you want to decarbonize the energy sector. As far as small reactors go, these events in Japan will strengthen their hand as opposed to weakening it.”

U.S. Energy Secretary Steven Chu, who won the Nobel Prize in physics in 1997 for using lasers to study atomic particles, has requested $97 million for small-reactor development in fiscal 2012, which begins on Oct. 1. Chu said on March 16 that President Barack Obama’s administration will press ahead with efforts to expand loan guarantees for new reactors.

No Pumps, External Power

Reyes says his preliminary data show that his reactor would have survived the Japanese earthquake -- and held up under one that shook the ground even harder. NuScale’s reactor core is housed inside a vessel that’s 10 times stronger than the one in Japan, he says, and that’s placed in a pool of water and buried underground.

More important, his design doesn’t require pumps or external power to cool the reactor. Fukushima Dai-Ichi reactors, of which Toshiba Corp. was among the builders, overheated when power sources failed and pumps couldn’t deliver cooling water.

NuScale’s design relies on so-called passive safety systems that take advantage of natural circulation created by the heating and cooling of water inside and outside the reactor. NuScale’s design, which uses about 5 percent of the amount of fuel of the big models, produces less heat after it’s idled.

By 2025, the world could add 36 small reactors, each with 400 megawatts of capacity or less, according to the United Nations International Atomic Energy Agency. Of the 38 reactors of this size operating today, 34 were built before 1990 and use traditional technology rather than new designs.

TerraPower

TerraPower, the company Gates is backing, aims to build a sodium-cooled reactor by 2020. It would consume spent fuel from conventional plants and generate less waste of its own, addressing a problem that has dogged the industry. TerraPower has spent tens of millions of dollars on research and will need several billion dollars more for a prototype, CEO John Gilleland says.

Toshiba is planning a 10-megawatt model that, if approved, may supply the Alaskan village of Galena. Older, larger Toshiba reactors overheated amid the earthquake when backup systems failed to keep them cool. Toshiba declined to comment on the impact of the accident on its small-scale program.

Power for Oak Ridge

Babcock & Wilcox Co., Reyes’s main competitor in small models, has lined up a customer -- a crucial step before seeking NRC approval for its technology. The Tennessee Valley Authority, a federally owned utility in seven states, may build six small Babcock reactors to provide power for 4,800 Department of Energy researchers in Oak Ridge, Tennessee, says Andrea Sterdis, TVA senior manager for nuclear expansion. Terry Johnson, a TVA spokesman, says it’s too soon to say how the Japanese accident may affect small-scale reactor development.

Babcock’s new, 125-megawatt reactors would cost about $500 million each and become available as early as 2018, says Christofer Mowry, CEO of Babcock’s B&W Modular Nuclear Energy unit. He declined, through a spokesman, to comment on the Fukushima accident.

Ben Landy, an analyst at Baltimore-based T. Rowe Price Group Inc., says that Babcock already builds reactors for the U.S. Navy and that the company’s boilers and pollution-control equipment for coal plants are competitive strengths.

“If small reactors become a big market, that’s icing on the cake,” Landy says.

With 14.4 million shares, T. Rowe Price is Babcock’s biggest investor.

NRC Preparations

The NRC has been marshalling resources for when applications for mini-reactors start rolling in, NRC Chairman Gregory Jaczko says. The commission has 50 people who will determine whether the models need the same personnel, security and insurance as big designs and whether operators should pay similar licensing, disposal and decommissioning fees.

The U.S. nuclear industry is already growing more slowly than those of China, Russia and India. Nuclear generating capacity may jump by 77 percent in the Far East, including China, by 2020 compared with 12 percent in North America, the IAEA says. Capacity in Western Europe may drop 24 percent in that period, the agency says.

Too Much Risk

Most U.S. utilities still see too much risk. Constellation Energy Group Inc. abandoned a five-year quest in October for a third big reactor in Lusby, Maryland. Chicago-based Exelon Corp., the largest U.S. nuclear operator, with 17 reactors, is reassessing a $3.65 billion plan to raise output at its nuclear plants because the company expects safety reviews by the NRC, CEO John Rowe said on March 16. Marilyn Kray, vice president of nuclear development, says if utilities need power, and can be convinced that small reactors are cost-effective, they may build them at existing nuclear or coal sites, which already have transmission lines and permits.

About 1,450 miles (2,333 kilometers) from Reyes’s Oregon lab, in Santa Fe, Hyperion CEO John Deal has been working on what he calls “nuclear batteries” that hospitals, remote communities and oil companies can use for power and heat. Each reactor is designed to run for eight years before Deal retrieves it and drops off a new one.

Resident Entrepreneur

Deal, 47, worked at Los Alamos National Laboratory, where he says he got the idea to commercialize small nuclear technology, as “resident entrepreneur.” By 2020, Hyperion aims to have a prototype that can operate at 1,000 degrees Fahrenheit (538 degrees Celsius), 400 degrees hotter than water-cooled designs. Hyperion’s lead-bismuth model and sodium-cooled versions from other companies could generate electricity as well as heat for refining bitumen into crude oil or for warming the maternity ward of a hospital.

Deal says his “batteries” offer advantages over the reactors in Japan. They’d spread out power generation rather than concentrating it; they’d be a fraction the size of traditional models; and they’d be buried inside reinforced bunkers designed to withstand earthquakes. Cooling would work by gravity, without pumps.

“If there is a worst, worst, worst case, all contamination, if any, should be very local and remain in the ground inside the vault,” Deal says.

The planet has 40 years to slice carbon emissions in half or suffer a deadly rise in temperatures, according to the International Energy Agency, which advises the governments of 28 countries, including the U.S.

Nuclear proponents say meeting this challenge requires a cascade of inventions, including reactors that are smaller, safer and cheaper -- even after the crisis in Japan.

“There is still a need for clean energy and for getting away from fossil fuels,” Reyes says. “That part of the equation doesn’t change.”

To contact the reporters on this story: John Lippert in Chicago at jlippert@bloomberg.net Jeremy van Loon in Calgary at jvanloon@bloomberg.net

To contact the editors responsible for this story: Michael Serrill at mserrill@bloomberg.net or Susan Warren at susanwarren@bloomberg.net

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