B&W puts emphasis on mPower small reactors

Babcock & Wilcox (NYSE:BWC) is placing a growing amount of emphasis on its mPower affiliate which has an agreement to develop its small modular reactor unit technology at a Tennessee Valley Authority (TVA) site.

B&W discussed SMR technology and other issues during its quarterly earnings call May 8.

B&W subsidiaries make everything from boilers for coal and natural gas power plants to steam generators for nuclear power plants. B&W is also active on the coal plant SO2 scrubber market. During the past year, B&W did much contractor work during maintenance outages on various CANDU nuclear reactors in Canada.

B&W signed a cooperative agreement with the Department of Energy (DOE) in the first quarter of 2013 for SMR funding. The DOE will provide cost reimbursement for up to 50% of qualified expenditures incurred during the period from April 1, 2013 to March 31, 2018.

The DOE agreement should limit B&W expenditure to $85m to $95m on the SMR project in 2013, said B&W President and CEO E. James Ferland during a first quarter earnings call May 8.

Generation mPower LLC is a joint venture, majority owned by B&W. Bechtel owns a minority stake. The project uses two B&W mPower reactors to generate 360 MW within an advanced passively safe and secure plant architecture. The planned first mPower plant should enter commercial operation at the TVA site by 2022.

Ferland said B&W continues to search for additional mPower partners, and is making it a separate reporting unit within the company.

“We are looking for partners who bring something to the project beyond just money or sharing the risk” – although that’s important, Ferland said. Specifically, B&W is looking for a partner with expertise in turbines or certain other heavy equipment that B&W might not possess, the CEO added.

Eventually, B&W would like to see additional partners come on board that could give it access to certain international markets.

“I’d like to have a couple of partners come on in the near term,” Ferland said. Some additional partners could come on board as the TVA SMR project advances.

The next big milestone comes when B&W submits a design certification for its SMR technology to NRC in 2014; followed by TVA submission of its operating license application to NRC in 2015.

Beginning in 2013, B&W operates in five reportable segments: Power Generation, Nuclear Operations, Technical Services, Nuclear Energy and mPower. The small modular reactor business previously included in our Nuclear Energy segment is now being reported as a separate segment.

“We are pleased with revenue growth this quarter in both our Power Generation and Nuclear Operations segments,” Ferland said. “The contributions to operating income from Nuclear Operations and Technical Services remain strong and are meeting our expectations. Operating results in Power Generation this quarter reflect both the competitive environmental market and seasonal conditions that produce fewer project closeout opportunities.”

B&W cites FutureGen2, other projects

Aside from mpower, Babcock & Wilcox recently signed a contract to start second phase of the DOE FutureGen 2.0 carbon capture project. B&W is providing engineering on the project to demonstrate full-scale carbon capture and storage in Illinois.

“In the short run, carbon capture and storage is really driven by what happens with FutureGen,” Ferland said. In the long run, CO2 capture and storage could offer much growth potential for B&W should the United States eventually adopt some type of carbon regime.

B&W also announced May 6 that Mary Pat Salomone will retire as senior vice president and COO, will retire effective June 30, following 31 years with the company. She will continue serving as CEO of Nuclear Production Partners, LLC (NP2), the B&W-led joint venture competing for a DOE contract to run the combined Y-12 National Security Complex and Pantex Plant. 

The company reported 1Q13 revenue of $805.4m, an increase of $39.5m, or 5.2% from 1Q12. GAAP earnings per share for the first quarter of 2013 were 41 cents compared to 50 cents in 1Q12. Adjusted earnings per share for the first quarter 2013, which excludes the impact of $8.4 million of restructuring charges, were 46 cents a decrease of 8% from earnings per share of 50 cents for 1Q12.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.