Source: The Motley Fool | Maxx Chatsko | July 23, 2016
The company has long supported nuclear energy and is making big bets on next-generation reactors, but backlash against atomic power and a lost opportunity in the United Kingdom may stall development efforts.
Once heralded as a reliable and clean power source capable of expediting the shift away from fossil fuels, nuclear power faces an uncertain future. Several nations in the European Union have announced plans to rid their grids of nuclear power entirely, while various factors in the United States — the world’s largest producer of nuclear energy — are forcing tough decisions on companies. California will close its last remaining nuclear power plant by 2025. Illinois, which relies on nuclear power for 48% of its electricity, recently decided against providing subsidies to nuclear power plants in the state. If politicians stick to their guns, Exelon will close two facilities by 2018 that represent 12% of the state’s electricity generation.
The current environment complicates plans by General Electric (NYSE:GE) to usher in a new age of nuclear power with its partner Hitachi in a nuclear joint venture called General Electric Hitachi. The future the company envisions — with smaller, cheaper, less wasteful, and safer reactors — might be fading away. Are General Electric’s nuclear ambitions doomed?
General Electric’s nuclear dreams
While hardly the only company developing next-generation reactors, General Electric Hitachi could be among the first to gain regulatory approval for a Generation IV reactor. Its design is called PRISM, which is a small modular reactor, or SMR, that boasts several advantages over traditional nuclear power (most everything deployed today).
First is the reactor’s size. At just 311 MW, plants hosting PRISM reactors can be built in regions typically off limits to those relying on traditional nuclear reactors, which can top 1,000 MW. Being small has additional advantages. A PRISM reactor could be built in a factory off-site, then shipped to the construction site for final installation — resulting in construction costs and timelines that are a fraction of traditional nuclear reactors. The company was recently selected to lead a U.S. Department of Energy project aimed at testing the performance of 3-D printed nuclear reactor parts, which could significantly reduce the cost of building nuclear power plants.
Second is the reactor’s passive safety system. PRISM uses metallic fuel cooled by sodium salts resting at atmospheric pressure, which results in a uniquely efficient cooling system. In the event of an accident, the metallic fuel expands, reducing its density and slowing the fission reaction, thereby shutting down the reactor without any input from humans or electronic controls.
Third is the reactor’s design, which allows PRISM to extract more energy from traditional nuclear fuel, consume non-traditional fuels such as plutonium, and, importantly, consume growing stockpiles of existing nuclear wastes. General Electric’s reactor was named a “credible” solution to a federal report released by the government of the United Kingdom, which is scrambling to dispose of its world-leading stockpiles of civil plutonium — some of which is imported from other countries for safe keeping. The country’s 140 metric tons of plutonium could power the entire nation for 100 years if fed to a PRISM reactor. Most of the energy would come from the plutonium itself, while a significant amount of energy would come from cycling spent fuel back into the reactors. In fact, PRISM reactors could reduce the volume of nuclear wastes by 98% compared to traditional reactor designs by more fully consuming the longest-lived materials present.
The advantages of PRISM and other next-generation nuclear reactors has companies such as General Electric Hitachi eyeing a bright future for nuclear energy. The designs have the potential to be cheaper and safer in addition to producing less wastes (the ability to consume nuclear wastes could make them net-negative waste generators). Of course, the problem isn’t necessarily the technology, but the political and societal issues. But those factors could be uniquely confined to the West.
If you think nuclear power is dead, then you may want to refine that statement by region. Today, the world has roughly 440 nuclear reactors in operation, with over 60 more under construction in 15 countries. The biggest investments are coming from Asian countries such as China and India, which are eyeing to double nuclear capacity by 2020 to wean themselves off coal. Given the increased focus on reducing emissions while meeting growing electricity demand, next-generation nuclear could certainly play a pivotal role in capacity additions alongside wind and solar.
After investing hundreds of millions of dollars into the reactor’s development — with tens of millions more from the U.S. Department of Energy — General Electric Hitachi hopes to have the first PRISM operating by the mid-2020’s. However, significant additional investments are required and no one can know for sure how long it will take to get a novel reactor design approved by international regulatory agencies. If successful, the company has several options for monetizing PRISM in a global nuclear power industry worth tens of billions of dollars. General Electric Hitachi could sell or license the reactor design to power generators, much like General Electric does with its world-leading natural gas turbines. The company could also take the lead to build and operate facilities to expedite the arrival of next-generation nuclear power.
Whether or not the technology is selected as an option for disposing of the United Kingdom’s plutonium stockpiles or becomes an option for managing the distributed nuclear waste stockpiles in the United States (owned by the federal government with no real plans for the future), growing economies in Asia could provide an important boost to next-generation reactors. General Electric would hardly flinch if PRISM reactors never contribute a dime to the top line, but given the enormous global potential, successful commercialization could move the needle for the company and its investors — and that’s difficult for any single project to do.