Power Utilities Could Turn toPower Utilities Could Turn to Smaller Nuclear Reactors

The possibility of using small, modular nuclear reactors has FirstEnergy reconsidering its future in nuclear power, reports the Toledo Blade. In the mid 1980s, FirstEnergy spent $6 billion building the Perry Nuclear Power plant on Lake Erie, the paper reports, but the price tag kept the company from expanding.

However, the smaller reactors, which are only about the length of a bowling lane and cost as little as $500 million each, are making the Akron-based utility rethink its future in nuclear power.

Pete Sena, president of FirstEnergy Nuclear Operating Co., the utility's nuclear subsidiary, said while FirstEnergy can’t afford full-scale nuclear reactors, smaller reactors are manageable investments.

FirstEnergy is among 15 utilities who last year joined nuclear engineering and design firm Babcock & Wilcox Co. to form the mPower Industry Consortium. The group provides oversight and pre-licensing funding to develop a 125-megawatt "mPower" reactor — a small, modular light water reactor that is 83 feet high, weighs about 700 tons, and can power about 125,000 homes.

In comparison, the Davis Besse nuclear reactor, commissioned in 1978 near Toledo, generates about 940 megawatts.

The smaller reactors are more cost-effective for companies that must fund the cost of building their own plants, said Chris Mowry, president of Babcock & Wilcox's Modular Nuclear Energy subsidiary.

Since Ohio deregulated electric utilities in 2000, electric rates are determined through competitive bidding, and utility companies such as FirstEnergy can’t build new plants and have the cost passed on to customers.

The answer, Mowry said, is to get the total cost under $2 billion, or about the price tag of a new coal-fired or combined-cycle natural-gas fired plant.

With small, modular reactors, that $2 billion or less price is achievable, because for that amount, a utility should be able to buy two modular reactors with a total output near 360 megawatts, Mowry said.

The small modular reactors are still under development, and won’t be approved for use in the United States before 2020.

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Can Babcock Wilcox Change The Game With The Modular Nuclear Reactor?

By Simit Patel

One of the many reasons I'm so excited and so bullish on the nuclear industry is that we are seeing a cycle of innovation - something akin to the industry lifecycle - playing out in the nuclear sector (NUCL). I believe we are in the early stages of the innovation phase, and are going to see many innovations in nuclear technology that enable the industry as a whole to meet the challenge created by a world demanding more scalable, cost-effective power without fossil fuels. For investors, I believe this will create an abundance of opportunities.

One of the opportunities I'm most excited about - in addition to breeder reactors and uranium sea mining, which I discussed previously - are modular nuclear reactors. These devices have the ultimate effect of making nuclear power feasible on a smaller scale. They have lower upfront costs, and thus have the potential to reach customer segments that were previously locked out of the market due to the high upfront costs required in building a conventional nuclear power plant. Any innovation that enables price reduction so that a new class of customers can participate is a low-end or new market disruption - an opportunity that, if it gains sufficient traction and an innovation cycle of its own, can be the foundation for a much larger transformation in the entire industry. The pioneering writings of Dr. Clayton Christensen are essential reading for those looking to understand how cost-savings innovations transform markets and create outstanding investment opportunities.

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