Two of Minnesota’s representatives in the U.S. House—Tim Walz, a District 1 Democrat from Mankato, and Erik Paulsen, a District 3 Republican from Eden Prairie—declared their support in late November for ending Minnesota’s moratorium on building nuclear power plants. They weren’t alone.

They had backing from the Minnesota Chamber of Commerce, the Minnesota Building and Construction Trades Council, and apparently from many members of the Minnesota Legislature. In last year’s session, the state senate approved a repeal of the 16-year-old moratorium; the house fell just short of doing the same. Efforts by lobbyists and legislators are likely to bring the issue to a vote again this year.

A week or two before Walz and Paulsen spoke out, the Minnesota Public Utilities Commission (PUC) was approving a plan by Xcel Energy to produce a combined 235 megawatts of additional electricity at its Prairie Island and Monticello nuclear power plants, the only two in the state. That would be a 12 to 15 percent increase in each plant’s output during the next five years.

Nationally, the Obama administration also has staked out a friendly position on nuclear energy, proposing additional federal loan guarantees, tax incentives, and other supports to help overcome the huge financing hurdles of constructing new nuclear plants. Cost estimates for new facilities now range from $6 billion to $10 billion. No new plant has opened in this country since 1996, though 12 applications for 26 reactors are now under review by the U.S. Nuclear Regulatory Commission, and a few sites on the East Coast have received preliminary approvals.

Meanwhile, the Department of Energy is funding R&D for “next-generation nuclear plants” that would use fuel more efficiently, produce less waste, and integrate power generation with the co-manufacturing of products such as biofuels or fertilizers, which currently require large amounts of natural gas heat for processing.

No one could be happier about nuclear energy’s resurgence—and its makeover in the public mind from environmental threat to green, renewable energy source—than a small company based in Shoreview. PaR Nuclear makes automated fuel-handling equipment for nuclear plants. Its sales grew from $20 million in 2004 to $50 million in 2008.

“Our employees . . . are looking at growth,” despite the weak economy, said Greg Hott during an interview last summer, when he was president of PaR Nuclear. That rosy outlook was thanks in part to the company’s acquisition, beginning in 2004, by Westinghouse, whose plant designs have been a template for roughly half of the world’s nuclear power facilities. Through its own growth and its more recent partnership, PaR Nuclear now has equipment in 100 plants in 10 countries around the world.

Bill Burns, a 30-year veteran of Westinghouse, took over as president of PaR Nuclear in August. He says PaR’s equipment is included in Westinghouse’s newest model of nuclear plant, the AP1000, which it already is building abroad and has orders for domestically.

“PaR is not just a little company on the prairie anymore,” Burns says. What began as no more than a sideline for another Minnesota firm in the 1940s is now a company “on a broader stage in a global market.”

A Nuclear Rise and Fall

The roots of PaR Nuclear tap an unlikely source in General Mills. The maker of Cheerios and Bisquick incubated PaR some 66 years ago, when the food company worked for the U. S. Department of Defense to support the country’s efforts in World War II.

Those contracts evolved into a General Mills “mechanical division,” a custom-equipment design group. It developed a mechanical arm for use in nuclear research at facilities such as the Argonne and Savannah River national laboratories in Illinois and South Carolina.

General Mills shut down its mechanical division in the early 1960s. At the time, four engineers who had worked there, including Karl Neumeier, approached the company to ask if they could take over some of the division’s products.

“In essence, they gave us the business,” says Neumeier, now in his 80s, retired, and living in Wisconsin. “It was a friendly thing.” He and his three partners sold stock locally to get operating funds. They continued to apply their ideas to the emerging commercial nuclear energy industry. “We did almost anything we could to stay in the nuclear business. It took us a year before we got any jobs and made any money.”

Their company, Programmed and Remote Systems—later shortened to PaR Systems—specialized in building equipment that loads fuel into the reactor at a nuclear power plant. They also made equipment for swapping out spent fuel assemblies for new ones, and racks for storing the used assemblies.

PaR Systems worked with Westinghouse Electric, General Electric, and Combustion Engineering, the three main designers and builders of nuclear plants in the United States at the time. That meant solid growth for PaR—until the late ’70s.

Then several factors—low energy demand in a weak economy, regulatory uncertainty, an abundance of relatively cheap oil and gas following the Arab embargo and the construction of the Alaska pipeline—all helped put the brakes on nuclear plant construction. The 1979 accident at the Three Mile Island nuclear plant in Pennsylvania—a serious meltdown, though minimal radiation was released and no one was injured or killed—galvanized antinuclear public opinion.

Over time, however, PaR Systems had developed specialized cranes and other large material-handling equipment for additional markets in the aerospace, defense, non–nuclear energy, and marine industries. It could thrive on those sales.

The nuclear division hung on, servicing the power plants where it previously had sold equipment. Then in the early 1990s, engineers in the nuclear division opened up new opportunities by developing automated control systems that could replace the original equipment—then approaching 30 years old—in many plants.

Until recently, automating existing plants has been PaR Nuclear’s core business. But the development of automated control systems—and of nuclear plants in other countries—opened up opportunities for PaR in new plant construction as well.

Demand Abroad

While nuclear energy development was largely stymied in the United States in the 1980s and ’90s, the same was not true in other countries. South Korea is a case in point. Without much in the way of its own natural resources for power generation, it turned to nuclear power to meet its growing needs and became PaR’s first foreign customer in 1990. PaR supplied fuel handling and refueling systems for a new plant that year and eventually installed equipment in five more South Korean plants.

PaR’s computer-based control systems helped it enter other markets, as well, selling equipment for new reactors and for upgrades at aging nuclear plants around the world. The fact that nuclear plant design and construction has always been a consolidated industry—even some plants that weren’t built by Westinghouse are based on technology licensed from the firm—meant that PaR’s equipment could fit into almost any plant anywhere, Burns says. (The exceptions have been plants built by the former Soviet Union and by Canada.)

PaR sold into South Africa, France, Sweden, and Taiwan in the mid-1990s. When China began building a wave of nuclear power plants in the early 2000s, it too became a major PaR customer.

The company’s main competitors, Areva and REEL, are both French. Areva has a U.S. subsidiary in Virginia and its scope of business is much broader than PaR’s, encompassing other forms of energy and, for nuclear plants, everything from supplying fuel to selling electricity. REEL is primarily a competitor overseas and is more narrowly focused on many of the same fuel-handling operations as PaR. PaR estimates that it has about 30 percent of the fuel-handling market globally.

“We make the Cadillac of remote handling equipment,” Burns says. “PaR excels at integrating PLC [program logic controller] technology and computers with the mechanicals.” That makes PaR’s equipment more highly automated than competitors’, he says, which enables a plant to operate with fewer people, and move equipment quickly and accurately.

Aiming to broaden its global business, PaR agreed to become majority owned by Pennsylvania-based Westinghouse in 2004, and what had been PaR Systems split into two entities: PaR Nuclear joined forces with Westinghouse; PaR Systems, producing PaR’s equipment and services for other industries as well as some for the nuclear market, continued as an independent company, also in Shoreview.

Westinghouse purchased the rest of PaR Nuclear and made it a wholly owned subsidiary in 2006 (just before Japan’s Toshiba bought Westinghouse). David Howell, vice president of global field services for Westinghouse, says his company was attracted to PaR because of PaR’s dominance—equipment installed in 80 percent of America’s nuclear plants—in the nuclear fuel-handling sector.

“When we acquired them, we had two things in mind: the new-plant market and the service arm,” Howell says. “PaR Nuclear has a very good service arm for keeping cranes and refueling equipment operational.

“When power plants go into a scheduled outage, their fuel machines are the key link to get the plant refueled and operational in the scheduled time. When the machines go down, it’s a big deal,” Howell explains. “The preventive maintenance and the spot repair of the machines is a key attribute of PaR Nuclear.”

The relationship with Westinghouse enabled PaR Nuclear—which now employs 180 people, including 85 engineers—to grow its international presence enormously, Hott said. For the first time in the company’s history, exports made up more than half of PaR’s 2008 revenues, which the company declines to disclose. When PaR employees from Shoreview travel the world to seek out prospective clients, they typically team with local Westinghouse employees in those countries who can introduce them to the right people.

Asia in particular has been a strong market for PaR Nuclear. The company has four projects booked in South Korea now, and 10 assignments to design, manufacture, and test equipment for new plants in China. In the next 30 years, China will build up to 70 new nuclear power plants, by Westinghouse’s estimate.

Other countries—India, Brazil, the United Kingdom, France—will likely be strong markets, and so will Japan, which, according to the International Atomic Energy Agency, plans to get 40 percent of its electricity from nuclear power plants by 2020. At the same time, a changing domestic market will likely keep PaR Nuclear busy in the U.S.

A Comeback at Home?

What has changed since the late 1970s and made nuclear energy more attractive in the United States? Nuclear power now sits where rising demand for electricity and waning tolerance for climate-warming fossil fuels intersect. In other words, everyone wants to set up bigger computer server farms and plug in more digital gadgets; no one wants to pay for the juice with a carbon-induced apocalypse.

Opponents of nuclear power note that it poses its own threats. The problems of nuclear waste storage and the risks of plant failure and accidental radiation haven’t disappeared. But it seems the public is more willing to overlook them. In a September 2008 poll cited by federal agencies and conducted for the Nuclear Energy Institute (NEI), a nuclear advocacy and lobbying group in Washington, D. C., 74 percent of Americans said they favor nuclear energy, a number that has risen steadily since 1995.

Currently, about 20 percent of the electricity generated in the United States comes from 104 nuclear reactors at 26 sites across the country. But the U.S. Department of Energy projects that demand for electricity will increase by 24 percent by 2030. By the NEI’s estimate, the country would need to build three reactors every two years starting in 2016 just to maintain that 20 percent share for nuclear.

And “that does nothing to push back on existing carbon emitters,” says the NEI’s Tom Kauffman. “We have to do double duty here. We need to meet the increase in demand, and we have to expand non-carbon-emitting sources of energy to replace the carbon-emitting sources.” Though expensive to build, nuclear plants are relatively inexpensive to run, he says, creating electricity from steam generated by the nuclear reaction. He adds that nuclear energy is baseload energy that’s always “on,” an advantage over wind and solar energy.

In 2002, the Department of Energy began trying to encourage the development of nuclear energy in this country by touting a streamlined approval and licensing process for those who wanted to build plants. With the passage of the 2005 Energy Policy Act, Congress provided added incentives in the form of loan guarantees, tax breaks, and mandates for renewable energy production.

Finally, in 2007, those measures started to bear fruit, when utilities began applying for licenses to build new nuclear reactors. Some could begin construction in 2011, and be up and running between 2016 and 2018.

Burns says those plants and existing ones will probably outsource more of their technology upgrades and reactor-equipment management than they used to, as utility companies seek to reduce their operating costs. About two years ago, PaR Nuclear began offering stepped-up “asset management services” to its customers. Burns says the company now projects 50 percent growth in its field services revenues—which were 25 percent of overall revenues in 2009—in each of the next five years.

First, though, the new plants must get built. In the domestic plants for which Westinghouse has orders (pending full approval and licensing), PaR will supply equipment like a refueling machine that has a 25-foot-long fixed body and a telescopic arm that extends another 25 feet to load and unload fuel assemblies from a reactor; a transfer system that carries fuel assemblies from the reactor to the spent-fuel storage area; and a massive bridge-trolley-hoist structure for moving the spent-fuel assemblies from the transfer system into an elevator and then into the storage pool. Every 18 months, one-third of a nuclear reactor’s fuel assemblies must be removed and replaced.

Completing those pieces of equipment for a single nuclear plant requires 10,000 engineering hours, Burns says. In general, it takes nearly a year to make the equipment for a single plant, from the time it’s ordered until it’s delivered to the customer. PaR Nuclear expects that its current U.S. orders alone will occupy its employees for the next five years. With other orders from around the world thrown in, PaR could have enough work to keep its plant humming for another 10 to 15 years.

“It’s a long process to build a new nuclear power plant: six to seven years from applying for a license to having the plant finished and connecting it to the electrical grid,” Hott said. These are still early—and tentative—days in nuclear energy’s U.S. comeback. But “even if a portion of what people are talking about goes forward, it will be a significant market for PaR Nuclear and for our employees.”
 

A version of this story originally appeared in the August 2009 issue of Enterprise Minnesota magazine, published by Enterprise Minnesota, a nonprofit consulting firm in Minneapolis that develops growth strategies for Minnesota companies, especially in manufacturing. Freelance writer Suzy Frisch and TCB’s Jake Anderson and Denise Logeland did additional reporting for the story as it appears here.