* Decision on $452 mln in federal funds due in Sept
* Established player B&W seen as favorite for half
* NuScale design touted by new backer Fluor for safety
By Braden Reddall
CORVALLIS, Ore., Aug 31 Nuclear power startup
NuScale Power LLC is competing against some of the biggest names
in the business for a U.S. federal grant to develop the next
generation of nuclear reactors -- and it is playing the safety
The smart money may be on Babcock & Wilcox Co, a
long-time provider of reactors for U.S. submarines, in the
competition to be one of two companies to split a $452 million
grant, according to industry experts.
But NuScale is trumpeting the safety aspects of its new
technology, and has found helpful supporters including U.S.
engineering giant Fluor Corp, which bought a majority
stake in the 5-year-old company last October.
Besides the money, winning a vote of confidence from the
Department of Energy is perhaps worth more to NuScale, which was
on the verge of collapse in early 2011 after finding out that
its main backer, hedge fund manager Francisco Illarramendi, had
been running a Ponzi scheme.
Then, only days after Illarramendi pleaded guilty, came the
Japan earthquake and tsunami that crippled the Fukushima nuclear
power plant and curtailed global demand for new reactors.
Until then, advocates had talked of a nuclear renaissance
because of its low carbon footprint. But public reaction to the
months of scary headlines out of Japan put many nuclear
investment plans on hold.
In the wake of Fukushima, the Corvallis, Oregon-based
company has been trumpeting the safety of its own small modular
reactors (SMR), and continues to believe that gives it a winning
edge over competitors for the federal SMR grant. Applicants also
include Toshiba Corp's Westinghouse, supplier of the
first U.S. nuclear reactor in 1957, and Florida-based Holtec
International Inc, a maker of casks for storing nuclear waste.
NuScale's 45-megawatt reactor, which can be grouped with
others to form a utility-scale power plant, would sit in a 5
million-gallon pool of water underground, meaning it would
require no pumps to inject water to cool it in an emergency.
"When we first started talking about SMRs, it was all about
economics," Chief Executive Paul Lorenzini said in an interview.
Piecing together many small reactors, which are 60 percent-built
in a factory, would be easier to finance than the $6 billion
minimum for existing reactor designs of 1,000 MW or more.
After Fukushima, NuScale reversed its approach to promoting
the design, and safety now overrides all other concerns, he
Charles Ferguson, president of the Federation of American
Scientists, said Babcock & Wilcox was clearly a favorite to be
one of the two winners of the grant, pointing to the company's
strong track record and long service for the U.S. Navy.
"But I'd be disappointed from a technological standpoint" if
NuScale didn't get the second spot, said Ferguson, who served on
a ballistic missile submarine and studied nuclear engineering at
the Naval Nuclear Power School.
THE GREAT PAUSE
NuScale staff half-jokingly refer to the first half of 2011
as the "Great Pause," when NuScale could not pay its bills and
dozens among its 100 employees at the time had to be let go. It
now employs 260 people, and hopes to add another 70 by year-end.
The firm's forest-covered home state certainly seems an
unlikely place for anything nuclear to emerge. It was 20 years
ago this month that Portland General Electric decided to
close Oregon's only nuclear plant, Trojan, due to chronic steam
generator problems. A few months later the plant was shut down
permanently after 16 years in operation.
Yet the NuScale design has managed to win over Oregon's
national representatives, who tend to be against nuclear power.
Senator Jeff Merkley, a self-described "proud progressive,"
surprised Lorenzini by throwing his support behind SMRs.
Nonetheless, critics are quick to point out that they do not
solve the long-debated problem of storing nuclear waste.
"SMRs are just the next chapter in a nuclear industry that
can't stand up on its own," said Don Hancock, director for
nuclear waste safety at the Southwest Research and Information
Center. "So it always has to be funded by the government."
B&W is known as a politically savvy operator. The Charlotte,
North Carolina-based company garnered public support from Ohio's
two U.S. senators for its memorandum of understanding for SMRs
with Ohio utility FirstEnergy, signed late last month.
Five days later, B&W opened a fuel technology center for its
mPower 180 MW design in Virginia -- about a three-hour drive
from Washington, D.C. On top of that, mPower has the backing of
leading U.S. engineering company Bechtel.
Westinghouse, for its part, can point to a long relationship
with the U.S. government, starting with its work with the Atomic
Energy Commission that led to its pioneering commercial reactor
in Pennsylvania in 1957. Westinghouse has the backing of utility
Ameren Missouri, which committed to applying to build
its 225 MW SMR if Westinghouse gets a piece of the DoE money.
The Oak Ridge National Laboratory has cited advantages in
the NuScale reactor and Holtec's HI-SMUR 140. The laboratory
found the natural water circulation force in both was strong
enough to cool them - "thus eliminating the need for pumps
NuScale Chief Technology Officer Jose Reyes, who spent
nearly a decade at the Nuclear Regulatory Commission, said it
would take 30 days for the water to boil off after any accident
that shut down a NuScale reactor.
The NuScale design was originally developed with a
Department of Energy grant in 2000, before it was refined with
backing from Oregon State University in Corvallis. The firm
secured the patents by giving OSU an equity stake.
As for its main shareholder, Fluor says it is committed
regardless of whether NuScale wins in the "FOA" - or funding
opportunity announcement, as the DoE grant award is known. Fluor
has its eyes on deploying the reactors for clients, like miners,
who need power in remote places without access to the grid.
Lorenzini said he would simply have to reassess strategy if
NuScale does not win the award. Yet it clearly weighs on the
minds of many at NuScale headquarters, where there was audible
chatter about the FOA among junior staff in one conference room.