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To jump-start construction of modular reactors, the administration proposed a cost-sharing program of $500 million over five years to help two companies develop designs and obtain Nuclear Regulatory Commission licenses. The DOE funds would be equally matched with industry money. There are those who maintain the government should not be involved in energy development, and that it should be left to the marketplace to determine which technologies emerge in America’s energy future. That’s an understandable sentiment, given the Solyndra scandal. But nuclear power, which has enabled the nation to meet its energy needs for more than a half-century without polluting the air or depending on the whims of foreign rulers, got its start with government financial backing. The first nuclear plants were built with government funds.

Like conventional nuclear plants, small modular reactors could produce electricity around the clock, day in and day out, without being subject to weather conditions. But what’s especially appealing about small reactors is their affordability. Instead of having to pay the capital cost of a new nuclear plant, which can run $8 billion or more, a utility would have the option of ordering small modular reactors for construction in a series, as funds become available and the need for electricity arises. The Tennessee Valley Authority recently signed a letter of intent to buy six small modular reactors using conventional light–water reactor technology, each with the capacity to produce 125 megawatts of electricity, from Babcock & Wilcox, a Virginia-based nuclear manufacturer. A small reactor is expected to take three years to build instead of five years or more for a conventional 1,200-megawatt nuclear plant. Experts say that a prototype reactor would cost about $500 million.

Small modular reactors — known as SMRs — would be shipped from a factory by rail or truck to a nuclear site and situated side-by-side. They would be hooked to the same electric-power grid but operate independently of one another. One module could be taken off line for refueling and maintenance while the others produce electricity. At some locations, modular reactors could be situated beneath the ground for security. What’s more, SMRs are air-cooled. They don’t have to be located on the oceanfront or near lakes and rivers, an important feature in large parts of the world where water resources are scarce.

The question is whether, in the face of opposition from Sen. Feinstein and some other members, Congress will make funds available for developing SMRs. At least 10 U.S. nuclear companies have done preliminary design work. They include such well-known names as Westinghouse, General Electric, General Atomics and Babcock & Wilcox. And a number of start-up companies are part of the competition. “SMRs could change the game and restore U.S. leadership in nuclear power,” said Vic Reis, a senior adviser in the Department of Energy’s Office of Science. “Nuclear power is essential to the administration’s commitment to clean energy.”

But if our reactor designs are going to be competitive in the global marketplace, it is essential that American companies be able to compete on a level playing field. Foreign reactor manufacturers have the backing of their governments in the form of subsidies and grants. Our companies, on the other hand, are cut off from government support. Congress can and must make this a turnaround decade in building a more affordable modular reactor for electricity generation. A factory-built small reactor should be the cornerstone of our government’s energy strategy.

Why?

Because realistically, there is no other course

One of the design developments for investors to keep an eye on is in construction of what are known as small modular reactors (SMRs). This new school category of plants is defined as reactors making less than 300 megawatts of electricity, or the amount needed to power 300,000 American homes. (That's about a quarter of the energy output of today's big reactors.)

Factory-built and delivered on site, small modular reactors have the potential to change the nuclear landscape. In this case, it's as simple as time and money. Because unlike large reactors that cost as much as $10 billion and take five years to build, small modular reactors can be built in half the time and for as little as $5000 per kilowatt capacity. What's more, the modular units arrive on site ready to "plug and play", dramatically changing the old model of time and cost. But here's the real kicker: SMRs are designed for a high level of passive or inherent safety in the event of a malfunction.

according to a 2010 report by the American Nuclear Society, many of the prudent safety provisions already built in large reactors are unnecessary in the smaller designs. And their smaller size also allows them to be built underground, making them considerably less vulnerable to the events that caused the Fukishima disaster

“This is a reactor that is designed with safety first,” says Victor Reis, senior advisor in the Office of Undersecretary of Energy for Science, “not one that you do the physics first and then add the safety on.”

These smaller designs also have the support of the current administration, whose 2012 budget request provides $67 million to help companies develop smaller plants and win regulatory approval for their designs. Meanwhile, the Commerce Department recently called SMRs a “tremendous new commercial opportunity for U.S. firms and workers” since, according to the International Atomic Energy Agency, the global demand for small modular reactors could reach 500 to 1,000 reactors by 2040.

One of the early leaders in this new trend is a long-time nuclear player called Babcock and Wilcox (NYSE: BWC).

The letter of intent also specifies the division of responsibilities between GmP and TVA for the preparation and NRC review of a construction licence application. The letter also describes the timing of the projects activities for successful completion of major EPC milestones.   Ali Azad, GmP president and CEO, said, "We have been working with TVA for some time to evaluate the technical and regulatory requirements associated with constructing B&W mPower SMRs at its Clinch River site."   In a statement, B&W said, "GmP remains on track to deploy the first B&W mPower reactor by 2020 at TVA's Clinch River site."   The mPower Integrated System Test (IST) facility in Virginia is expected to soon begin a three-year project to collect data to verify the reactor design and safety performance in support of B&W’s licensing activities with the NRC. TVA plans to submit a construction permit application to the NRC in 2012, while GmP plans to submit a design certification application in 2013.   B&W claims that the "scalable nature of nuclear power plants built around the B&W mPower reactor would provide customers with practical power increments of 125 MWe to meet local energy needs within power grid and plant site constraints."