Inside NRG's new nuke thinking

(Fortune) -- Is the United States finally about to embark on a long anticipated nuclear power renaissance? It seemed so yesterday, when Princeton-based NRG Energy (Charts, Fortune 500) filed a license application to build two new nuclear reactors at its existing facility in Bay City, Texas.

It has been nearly 30 years since the U.S. Nuclear Regulatory Commission received the last such application. But with nearly three dozen U.S. projects in the works, more will surely follow.

The proposed NRG plan has several intriguing features. One, NRG is an energy wholesaler, not a regulated utility. Most observers have long assumed that the first new nukes out would be built by regulated utilities, which can finance new-plant construction with rate hikes. NRG will instead be the first to take advantage of government loan guarantees covering 80% of the estimated $6-billion cost. The loan guarantees will come both from the US, as provided by the Energy Policy Act of 2005; and Japan, where nearly all the key components of the proposed new plants will be built.

Skip Bowman, CEO of the Nuclear Energy Institute, said in a statement that NRG's action represents "a new market approach to building a nuclear power station."

Two, NRG has chosen for the project the ABWR (advanced boiling water reactor) designed by GE (Charts, Fortune 500) and Hitachi (Charts). The ABWR is far from being the most advanced blueprint currently available, but that's just it. The industry has been tripped up so many times in the past by regulatory hurdles and costly construction delays that the last thing it wants is to try to push through a revolutionary design.

Or as NRG CEO David Crane puts it, "No first-of-a-kind engineering for us." Adds Crane: "It took us about 15 minutes to select the technology we wanted because we really only asked one question - show us the modern technology that's been built on time and on budget. ABWR is the only one that can make that claim."

NRG currently operates two Westinghouse reactors at the 12,200-acre site, 85 miles south of Houston. The new reactors, which still have several hurdles to clear and won't be up and running until 2014 at the earliest, could together produce 2700 additional megawatts of electricity, enough to power two million homes. "When all four are functioning," says Crane, "they'll displace the entire carbon emissions of Belgium."

Nuclear as clean energy? That's Crane's controversial view. He's a fascinating character: a Fortune 500 CEO in an industry that's still heavily dependent on coal, oil and natural gas, who nevertheless favors mandatory legislation to reduce greenhouse gasses. And unlike others in his industry who say the regulatory burden should be shared equally across sectors, he's willing to go it alone. "Let Detroit do what it wants," Crane argues. "If we clean up our carbon situation over next 20 years, principally with nuclear, then we will be seen as clean. And Detroit will have to go to plug-in hybrids. If you change the 240 million cars and light trucks to even a 50-mile battery, that would increase the total electricity consumption in the United States by 33%. For our industry, that's the best thing since the electric air conditioner."

Critics argue that nuclear is inherently dangerous, generates unsolvable waste-disposal problems, and produces plenty of greenhouses gasses, thank you very much - if not during the power-generation phase then in the mining of uranium and the construction of the plants.

Crane couldn't disagree more. "I'm one of those people who thinks global warming is a paradigm-shifting, life-changing, generation-affecting issue that we have to pull out the stops and do something about, and I think nuclear has to be at the forefront of that," he argues. "Nothing on the supply side of zero-carbon power generation moves the needle like nuclear. In anyone's book it's gotta look better than building 151 more coal plants in this country. You simply can't be serious about global warming and still be antinuclear. If you are those things, I have no time to talk to you."