Don’t count out nuclear just yet by Richard Martin @FortuneMagazine August 16, 2011, 2:10 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The summer meeting of the American Nuclear Society could have been a wake. The exuberant “nuclear renaissance” of the past few years — by 2009, the U.S. Nuclear Regulatory Commission had received applications for 20 new plants — fizzled in the wake of the Fukushima nightmare. Not one, but two conference sessions were entirely devoted to the painful lessons of that catastrophe. In the weeks before, eight separate state legislatures had dealt the industry blows of varying severity. And, the stock prices of the world’s largest nuclear suppliers had yet to recover from a drastic post-disaster dive. Not even the posh seaside resort in Florida where the conference was held could mask what a lousy time it was to be in the nuclear business. But as harrowing as the Fukushima debacle has been, it hasn’t dimmed the hopes of nuclear technologists, suppliers and manufacturers. It may, in fact, even allow the industry to move beyond the creaking technology of the past few decades, selling state of the art reactors much sooner than it might have otherwise. Some even quietly liken Fukushima to the devastating asteroid strike that doomed the dinosaurs and gave rise to more advanced species. The fact is new reactor research and development has long been stalled in the United States, since President Jimmy Carter killed the Clinch River breeder reactor program in the wake of the 1979 Three Mile Island accident. By the 1980s, innovation in nuclear power essentially ground to a halt. Today, some 85% of the electricity generated by nuclear plants comes from facilities of a similar design as Fukushima. As renewed interest and demand began taking off over the past decade, firms eagerly peddled evolutionary designs they assumed utilities would buy. Nuclear operators, meanwhile, squeezed new life out of old reactors through so-called “uprating” — running plants longer and at higher power outputs than originally intended. Until disaster struck. “Fukushima marked the death of conventional light-water reactors,” says Kirk Sorensen, founder of Flibe Energy, a highly regarded nuclear technology startup based in Huntsville, Alabama. He’s not the only one who thinks so. In June, the Reactor and Fuel Cycle Technology Subcommittee, a branch of the vaunted Blue Ribbon Commission on America’s Nuclear Future, released the draft version of its report on possible future reactors. It gave the next generation of reactors as close to a government endorsement as the industry has gotten in years. “What Fukushima has done is create a much larger incentive for utilities to purchase more advanced technologies,” says the committee’s chair, UC Berkeley physicist Per Peterson. “For us Fukushima actually raised our priority level somewhat in discussions in other countries,” says John Gilleland, CEO of TerraPower, the advanced-reactor startup backed by Intellectual Ventures, the technology incubator founded by former Microsoft MSFT CTO Nathan Myhrvold. The industry is betting its future on so-called Gen III designs, small modular reactors designed to be impervious to the kind of electrical failures that allowed the Fukushima reactors to overheat uncontrollably. They’re theoretically cheaper to build and thus more efficient on a cost-per-kilowatt basis than conventional reactors. (Westinghouse’s Gen III design, the AP1000, promises an eventual construction cost of under $2000 per kilowatt of capacity — well below the $5000-plus per-kilowatt estimates of other new nuclear builds.) They produce less toxic waste to be stored indefinitely, and some can even consume waste left over from current, outmoded reactors. Customers have bitten. This summer, the Tennessee Valley Authority signed an agreement with nuclear contractor Babcock & Wilcox to build six small, modular reactors on the Clinch River in Tennessee, marking the first such developments for commercial power generation. The government of France, a country that already gets nearly 80% of its electricity from nuclear, just announced plans to invest €900 million in nuclear power research and development. Pre-construction work has already begun on two plants in Georgia and South Carolina based on similar designs. But that doesn’t mean everything is in the clear. What’s slowing down the nuclear renaissance is not fear of another Fuskushima; it’s plain old economics. Depressed by the halting global recovery and by debt fears, demand is lagging. “With [electricity] load growth being flat or negative the owners are deciding to delay new construction projects,” Charles Hess, the longtime chief nuclear engineer at Burns and Roe who is now a consultant to the Department of Energy, laments. And that means, big leaps forward may yet have to wait.