Nuclear Reactor Innovation

Nuclear power innovation is a time-consuming and capital-hungry endeavor.  Demanding requirements do not appear to intimidate nuclear engineers.  There are as many as a half dozen designs under development  -  innovations that could take the industry well past the vexing light water reactors that got the South Texas Nuclear Power reactor into trouble during exceptionally cold weather in February 2021.  Three merit investors’ attention after near-term progress.

Long a powerhouse in the nuclear power industry, Westinghouse Electric Company is developing a transportable microreactor that uses TRISO fuel  -  TRi-Structural ISOtropic particle fuel.  Made carbon, uranium and oxygen that are encased in three layers of carbon and ceramic materials, the particle chemistries are thought to be more efficient at fission than conventional uranium dioxide fuel and therefore offers greater economy for operators.   Each microreactor is expected to last four decades and produce power for at least three years without refueling. Westinghouse calls its microreactor the eVinci and is targeting military applications that can benefit from the small, transportable design.  The company claims it takes less than a month to install.

Small is also the strategy for BWX Technologies (BWXT:  Nasdaq), which is developing its own portable microreactor using TRISO fuel.  Westinghouse is working with the Los Alamos Laboratory so BWX has teamed up with the Idaho National Laboratory and the Oak Ridge National Laboratory to test and qualify its TRISO fuel.  In December 2020, the company won $85.3 million in funding from the Department of Energy for development work over the next seven years.   BWX and its partners plan to use additive manufacturing or ‘3D printing’ to produce the nickel-based super alloys need for the components.    

In December 2020, TerraPower reached an important milestone with its molten chloride fast reactor technology when the U.S. Department of Energy endorsed one of TerraPower’s intermediate design proposals.  TerraPower along with its development partner Southern Company (SO:  NYSE) has been participating in the DOE’s Advanced Reactor Competition since 2016.  The two partners are on the way to a test that will validate the reactors thermal hydraulics and safety analysis codes.  The test operations are expected to be put into play mid-2021.   TerraPower’s molten chloride fast reactor uses liquid sales as both the reactor’s coolant and fuel.  This design distributes heat from the molten fuel salt through a heat exchanger to an inert salt in a second loop.  It is from this second loop that the heat can be extracted to generate electricity.

Investors may be disappointed with the paucity of investment opportunities in nuclear power reactor designs.  Out of this group the only way to take a direct stake in nuclear power reactor development is through BWXT.  Previously called the Babcock & Wilcox Company, BWX Technologies is a well established operation with a long history of financial success.

BWX reported $2.1 billion in sales in the twelve months ending December 2020, providing $278.7 million in net income or $2.91 per share.  The company earns its keep selling nuclear components and reactors to the U.S. Navy and Department of Energy as well as providing research reactor fuel for university research programs.  BWX earnings an impressive 10.7% return on its assets.  BWXT is priced at 18.7 times forward earnings and also offers a tidy 1.45% dividend yield to shareholders.  

 

Next in the nuclear power development series is a look at nuclear fuel development.      

 

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.