I read recently about nuclear power being "'50s technology," with the implication being that nuclear is outdated compared to other, more cutting-edge forms of green power.

By that logic, geothermal is pre-World War I technology and wind power literally dates to the Dark Ages. If nuclear is so retro, then companies such as U.S. Geothermal (AMEX:HTM) and Vestas Wind Systems (OTC BB: VWDRY.PK) are clearly out of place in the 21st century.

That characterization of nuclear power is nonsense. Like geothermal and wind, the technology has moved forward considerably since its earliest application.

Squeezing energy from a pebble
The state of the art in nuclear is actually a return to an idea bandied about in the 1940s, not the '50s. Maybe I'm not doing myself any favors by turning back the clock even further, but join me for a moment in marveling at the modern pebble bed reactor.

A "nuclear pebble" is actually larger than it sounds. It's six centimeters in diameter, about the size of a tennis ball. Each graphite pebble contains about 15,000 tiny uranium dioxide particles, which are coated in multiple carbon layers that control different aspects of the nuclear chain reaction. You know those hoppers used to gather tennis balls? When you pack roughly half a million nuclear tennis balls into a hopper-like capsule, you have yourself a pebble bed.

Nuclear fission is a sweltering affair, so some sort of coolant is needed to keep the temperature inside the core at manageable levels. Most reactors use water to moderate both the fission reaction and the heat inside the core, but pebble bed reactors use inert gases like helium as a coolant.

There are several benefits here:

  • The gas coolant doesn't become radioactive. It can directly feed a gas turbine and then be recycled in a closed-loop system.
  • Reactors that use water have to transfer the heat from the coolant to a secondary, nonradioactive fluid. Pebble bed reactors operate at relatively high temperatures, so they're more efficient than traditional light-water reactors.
  • They're designed to be safe even in the case of a coolant failure.
  • The units can take a modular form, meaning that power plants can be expanded to meet demand more easily and economically.

Where can I get one?
Pebble bed reactors (PBRs) are under development in a few places around the world. The parent of Huaneng Power (NYSE:HNP), having licensed the technology from a joint venture of Siemens (NYSE:SI) and ABB (NYSE:ABB), is leading the charge in China. What prompted my investigation of PBRs, however, was an announcement last week out of South Africa.

As the only country to have built and subsequently dismantled a nuclear arsenal, the Republic of South Africa has a colorful nuclear history. The national utility, Eskom, runs only one nuclear power plant today, but the country has indicated its desire to build two dozen more by 2020. Last week, the government approved its nuclear policy, and made clear that its design of choice is the pebble bed modular reactor (PBMR), which is being designed by a government-backed company of the same name.

The South African venture, having licensed the same high-temperature reactor technology as Huaneng, is moving forward with a 165-megawatt prototype reactor, which is small by nuclear standards. Still, if the technology can be proven, the modularity of the design could make these reactors a hot item.

Why they matter
Just like Google's (NASDAQ:GOOG) gigawatt gambit via solar thermal power plants, PBMRs could be built more quickly and located closer to points of consumption, thus tucking more neatly into the grid. This would be an attractive option for not only South Africa, but for countless emerging economies desperate for more secure baseload power.

Gone fission: