Smale Scale Nukes

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by Debra Fiakas CFA

The on-going crisis at one of Japan’s key nuclear power plants following earthquake and tsunami damage has everyone, even proponents of nuclear energy on edge. Previous nuclear accidents, such as the disasters at Russia’s Chernobyl reactor and the U.S.’s Three Mile Island, were traced back to human error. Now it appears regulators and operators of Japan’s Fukushima plant may have had some awareness that the plant design could not withstand the onslaught of a major tsunami. Again better human performance may have averted the situation that now threatens a breach of a reactor core.

Designers of nuclear plants have invented all sorts of ingenious means to minimize the threat of radiation leaks. They have provided to all contingencies – except human error. NuScale Power, Inc., based in Corvallis, OR, believes they have also found a way to minimize the fallout (pun intended) even if human error should occur.

NuScale has developed a modular, scalable light water reactor that is intended as a building block for a nuclear power plant. Each module would produce 45 MWe of energy through its own steam turbine. The system uses a convection process to transfer heat from water in the reactor system to water in the turbine system. Since no pumps are required to keep the reactor water circulating, NuScale engineers believe the design has a key advantage over power-dependent systems.

The company proposes to assemble a group of twelve modules for a 540 MWe power plant. Such a plant would be considerably smaller than conventional power plants that often feature reactors with 1000 MWe capacity. Herein resides another advantage touted by NuScale engineers. The smaller scale design has just 4% of the nuclear fuel inventory of a conventional reactor, putting significantly less radiation at risk per operating unit.

NuScale has several steps ahead of it to successfully put into operation a power plant based on its design. The company licensed technology from Oregon State University and has perfected the design enough to approach the U.S. Nuclear Regulator Commission for design certification. The company expects to submit a formal application in 2012. If the review process proceeds on schedule, the design should be approved by 2015. For the construction phase NuScale has already partnered with Kiewit Construction, which helped complete a detailed preliminary plant design and cost study. If all steps remain on schedule NuScale expect to have an operational plant by the end of 2018.

NuScale Power is a private company that has revealed few details about its financial requirements. We doubt the company is sufficiently well capitalized to execute fully on its business plan without external financing. Unfortunately, we expect such a round to be restricted to institutional or accredited investors. Nonetheless, it is worthwhile putting NuScale on our list of companies to watch in the nuclear sector so we added the company to The Atomics Index in the Nuclear Group.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. NuScale Power is included in Crystal Equity Research’s The Atomics Index in the Nuclear Group.


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