ST. LOUIS – From oil fields to wind turbines to coal mines, size and scale rule the economics of energy.

But the nuclear industry is thinking small these days.

Additional Photos

This view of the Ameren Missouri’s Callaway County nuclear power plant in Reform, Mo., shows the cooling tower, left, the building that houses spent fuel, center, the dome building that houses the reactor and the building that houses the steam turbine and electric generator, right. A large plant built today can cost many billions of dollars. McClatchy Newspapers photo

The latest evidence came in April, when Ameren Corp. and Westinghouse Electric Co. announced plans to pursue a $452 million federal subsidy to advance development of small modular reactors that could be built alongside the utility’s much larger Callaway nuclear plant near Fulton, Mo.

While some utilities are still pursuing full-scale plants, there is a parallel push for smaller reactors that could be easier for utilities to finance and minimize sticker shock for regulators and consumers. But despite a lower total cost, there’s no evidence yet that tiny fission factories would be able to produce electricity at a competitive cost in an era of abundant, cheap natural gas.

“There just isn’t any proof that small reactors are going to be any more economic than larger ones,” said Peter Bradford, an adjunct law professor at Vermont Law School and a former Nuclear Regulatory Commission member. “At this point, it’s all about hype and hope.”

The so-called small nuclear reactors promise the same benefits as larger ones: namely, an option for around-the-clock, low-carbon electric generation that could be a key in replacing aging coal plants.

For utilities considering nuclear technology, the smaller size means a smaller price. Even using the most generous cost estimates, a new nuclear plant the size of Ameren Missouri’s existing Callaway plant could rival or exceed the $7.5 billion market value of the utility’s entire parent company.

But the differences go beyond size. For one, the small reactors envisioned would be modular, able to be manufactured at a central factory, shipped by rail, ships or truck and assembled on site. That means a potentially larger market for vendors like Westinghouse.

“This (small) plant will appeal to a very broad market,” Kate Jackson, a Westinghouse senior vice president and chief technology officer, said recently.

The pursuit of small reactors represents a new path to the oft-referenced nuclear renaissance.

It was only a few years ago that the industry focused strategy on certification of a few large reactor designs that would, in theory, eliminate the risk and uncertainty, cost overruns and construction delays that tainted the last nuclear plant boom.

While new reactors are going forward in Georgia and South Carolina, a full-tilt nuclear revival hit a wall for several reasons. Among them: the inability of utilities to finance projects that cost multiple billions of dollars.

In fact, more than half of the new reactors for which construction and operating licenses were sought have been deferred or canceled, including Ameren Missouri’s proposed 1,600-megawatt Callaway 2 plant.

Andrew Klein, a nuclear engineering professor at Oregon State University, sees small reactors as part of a new strategy that could help utilities get over the hump by adding new capacity in small bites. They could then use revenue from the first small reactors to help finance subsequent units as more generating capacity is needed.

“It’s an entirely different business model,” he said.

President Barack Obama’s administration, which is pushing for development of low-carbon energy technologies, sees potential, too. And the president wants the United States to take the lead in developing the industry.

In March, Obama proposed $452 million to help speed up development of small modular reactors. The funding availability would come on top of $8 billion in loan guarantees for the Vogtle twin-reactor nuclear project in Georgia.

The federal funding, which has yet to be appropriated by Congress, would support engineering, design certification and licensing of up to two plant designs that have the potential to be licensed and in commercial operation in a decade.

Westinghouse says it believes it has an advantage because the 225-megawatt reactor it’s developing is an offshoot of the company’s full-size AP1000 reactor that has already been certified by the Nuclear Regulatory Commission.

“The path from here to the end is shorter for us than anyone else,” Jackson said. No other vendor has been through the new licensing process and has technology that’s already been licensed.”

At least two other groups have indicated they will seek a share of the federal grant. Both are eyeing the Department of Energy-owned Savannah River site in South Carolina, and are being backed by NuHub, an economic development initiative in South Carolina.

Holtec International Inc. last week said it intends to seek a share of the federal funding to speed up development of its 160-megawatt small modular reactor. Two weeks before that, NuScale Power, based in Corvallis, Ore., announced plans to seek funding to accelerate development of its 45-megawatt nuclear modules at Savannah River site.

Other nuclear industry players are pursuing modular designs. And at least one other utility has publicly expressed interest in small reactors.

The Tennessee Valley Authority has said it is looking at Babcock & Wilcox’s small reactor design for a project on a utility-owned site near the Energy Department’s Oak Ridge National Laboratory.

For all the hype, small reactors are still at least a decade away. And that’s if design, licensing and commercial development go at the pace hoped for by the nuclear industry.

And even then, the potential for small reactors hinges on how they compete in the energy marketplace. More than concerns about nuclear safety in the wake of Fukushima disaster in Japan or the problem of where to dispose of highly radioactive spent nuclear fuel, the technology’s future will be dictated by economics.

Jackson said Westinghouse aspires to make small reactors whose costs are equal to or less than full-size reactors.

For now, there’s no cost data for small reactors, and no firm evidence they will produce electricity at a lower price than larger plants.

“It’s too early to determine that,” Klein said. “We’re going to have to see some built.”

Ameren Corp. CEO Thomas Voss said at last week’s shareholder meeting that if a new power plant was needed today, the lowest cost option would be a natural gas-fired power plant, not nuclear.

But gas prices have been especially volatile in the past several years. After spiking to more than $14 per thousand cubic feet in mid-2008, prices have plunged to less than $2 — the lowest level in about a decade.

That kind of volatility makes utilities hesitant to commit to natural gas-fueled power over the long haul, so Ameren continues to pursue nuclear development in Missouri to keep the option available in years to come, Voss said.

“We continue to believe nuclear power will to play a role in meeting Missouri’s energy needs,” he said.

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