Things may be different today, but in its heyday, Microsoft was a game-changing company that forever altered the way the world interacted with computers. The creative genius and foresight of Bill Gates has paid off in a significant way: He's the wealthiest person in the world with a net worth of $76 billion, according to Forbes. While Gates still advises Microsoft, he has turned much of his attention to philanthropy through the Bill & Melinda Gates Foundation. When he's not eradicating poverty, disease, and a lack of opportunity for billions of people across the globe, Gates is solving other problems -- such as what to do with the world's growing stockpile of nuclear waste.
Questioning how to solve that problem led to the creation and funding of TerraPower, a start-up aiming to develop a Generation IV nuclear reactor that can run on a single loading of nuclear waste for 60 years and be cooled by liquid sodium. Some may argue that the nuclear industry is no place for a start-up, but engineering firm and nuclear design leader Babcock & Wilcox (NYSE:BWC) believes otherwise. The company has agreed to provide support to TerraPower as it develops the first prototype of its innovative reactor. What does it mean for TerraPower and Babcock & Wilcox, or competing reactor designs from General Electric Company (NYSE:GE)? Are we on our way to a sustainable nuclear-powered future?
Opening the Gates to clean energy
Startups often bust into an industry to disrupt the status quo and upset incumbents -- and TerraPower is no different. The company's Generation IV reactor design is based on a traveling wave reactor, or TWR, which can utilize depleted uranium (U-238) -- dismissed as waste -- as fuel. Better yet, the TWR can use depleted uranium to create fuel, or breed, to sustain economic operations for decades. TerraPower is leveraging well-known fast-reactor technology already developed in France, Japan, Germany, China, Russia, and the United States; supercomputer simulations for modeling operations; and basic energy-saving principles such as using sodium as a coolant rather than water.
While the idea may seem fanciful, consider that Argonne National Laboratory built the Experimental Breeder Reactor II in the early 1960s. It successfully demonstrated that a reactor could breed its own fuel in a closed-loop system and be cooled by a liquid metal. Later work with the reactor would test alternative fuel types and materials to build a foundation for later commercial reactors. Unfortunately, the reactor was shut down in 1994 -- and no integral fast reactors were ever built.
Fast forward to 2014 and the recent announcement that Babcock & Wilcox and TerraPower are joining forces to design and deploy a 550 MWe demonstration TWR. The pair is circling 2022 for the potential start-up date, and China as the potential host nation. The prototype reactor will help prove the company's traveling wave design, key operating equipment, and materials while providing a technical and licensing basis for future TWR designs. And, of course, supply power to the grid.
After collecting enough data from operations of the 550 MWe demonstration plant and acquiring the correct licensing permits, TerraPower and partners such as Babcock & Wilcox will be able to build commercial reactors, currently designed with a 1,150 MWe capacity, around the globe. Demonstration could take years, while building a commercial reactor could take several more, which means the TWR design is over 10 years away from providing ultra-clean sustainable power. That may give General Electric -- already considering a location in the United Kingdom for its next-generation reactor -- an early edge in the race to develop and deploy Generation IV reactors.
However, it's important to remember that many designs will flourish. Given the unique advantages of the proposed TWR, it wouldn't be difficult for TerraPower and Babcok & Wilcox to find suitors if their proposed design proves to work as planned. For instance, a single fuel loading can power a reactor for its entire 60-year lifetime -- saving up to $2 billion for a power generator! Additionally, the TWR could become a platform for additional future designs, including those that utilize thorium as fuel, rather than a single reactor.
Foolish bottom line
There are still several hurdles to deploying the technology. For instance, finding materials strong enough to sustain a reaction for decades with minimal -- or no -- maintenance, depending on the location of the equipment in question. That's one of the big reasons we won't see a commercial TWR deployed for quite some time. But no matter how you look at it, the future of energy looks pretty bright thanks to companies such as TerraPower, Babcock & Wilcox, and General Electric. Would you support a nuclear-waste-powered future? Weigh in with thoughtful comments below.
Is TerraPower too futuristic for your portfolio?
While it's good to keep an eye on the future, even I admit it's difficult to account for Generation IV reactors in an investment thesis today. They're simply too far off into the future. Luckily, The Motley Fool's chief investment officer has selected his No. 1 stock for 2014. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.
Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, CAPS page, previous writing for The Motley Fool, or his work for the SynBioBeta to keep up with developments in the synthetic biology industry.
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