The Obama administration has touted nuclear energy as part of the next step in America’s clean-energy future. An innovative nuclear energy firm has developed a smaller, economically viable nuclear plant that may revitalize the nuclear industry and related exchange traded funds (ETFs).

Nuclear energy already accounts for 20% of U.S. energy consumption. After a lull that has lasted two decades, the sector is poised to see a major revival.

Tennessee Valley Authority (NYSE: TVE), First Energy Corp. and Oglethorpe Power Corp. signed an agreement with McDermott International Inc.’s (NYSE: MDR) Babcock & Wilcox subsidiary to get the new type of small-sized nuclear reactor approved for commercial use in the United States, reports Rebecca Smith for The Wall Street Journal.

The smaller Babcock & Wilcox reactor generates 125 to 140 megawatts, or a tenth of what a big one can produce, but utilities believe that the smaller, simpler reactors can be quickly manufactured and installed at many existing nuclear sites or replace coal-fired plants. [Nuclear ETFs: The Wave of the Future?]

Nuclear energy investors worry that big companies who are planning large reactors that cost between $5 billion to $10 billion apiece will have a greater probability of things going wrong with the projects that take five years to complete. Jim Hempstead, senior vice president at Moody’s Investors Service, warns that utilities may face possible credit downgrades in their gamble to go nuclear. The small reactors are expected to cost around $750 million each, and the projects may take half the time to be completed as compared to larger projects. [5 ETFs to Play the Clean Tech Budget.]

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