Gates, Khosla-backed TerraPower lands $35M to launch a new era of nuclear

Environmental and policy hurdles continue to stymie nuclear development in the United States despite rapid growth in Europe. But a relatively new Seattle-based company called TerraPower is hoping to revamp nuclear’s public image with brand new technology — and it just raised $35 million to do it.

The company’s innovation isn’t its only distinguishing feature. It also has several prestigious backers, including Bill Gates, Khosla Ventures and now Charles River Ventures. All three participated in this recent, second round of financing. Their endorsement goes a long way, since all three have staked a claim in this sector, mostly supporting renewable sources of energy like wind and solar.

TerraPower, which spun out of Intellectual Ventures (founded by former Microsoft CTO Nathan Myhrvold), isn’t just rehashing nuclear power under a new brand name. Rather, its goal is to commercialize a new spin on traditional reactors, building what it calls traveling-wave reactors. They are able to generate electricity from a much smaller amount of enriched uranium, combined with recycled uranium from existing nuclear plants (and even the same plant). Considering that it’s the hazardous nature of this uranium (and its disposal) that most nuclear opponents object to, this change could very likely win the energy source new supporters.

A lot of people are unnerved by the thought of radioactive material and waste being shipped across great distances in the U.S. The ‘Not in My Backyard’ attitude that shut down nuclear growth decades ago is still prevalent. TerraPower counters this approach, claiming that its recycling reactors could run on their own byproducts for many more years than current reactors.

This sounds good, but the technology isn’t quite there yet. This recent round of funding is a stepping stone on a long journey toward a working commercial reactor. In fact, the company’s goal is to have a demonstration-scale reactor up and running 10 years from now. And this is actually fast by nuclear standards — one of the reasons new nuclear technology has been too expensive for many to pursue.

It’s amazing that TerraPower was able to find as much funding as it has. It’s going against many cleantech investing trends — first and foremost, the shrinking of venture deals, with many firms preferring to sink money into capital-efficient green IT plays that turn around quickly rather than ambitious, manufacturing-heavy solar and wind developers. Nuclear is even more pricey and long-term.

A lot of the company’s success seems to step from Gates’ support. The Microsoft chairman has been very outspoken about the need to come up with practical clean sources of energy, combined with energy efficiency strategies that go beyond anything we’ve done before. He champions nuclear as one of the most feasible sources of energy in the next decades, and has — together with Kleiner Perkins Caufield & Byers partner John Doerr — been after the U.S. Department of Energy to invest up to $16 billion every year in R&D in the area.

Gates happens to be a limited partner investing in Khosla Ventures, which makes its participation seem more logical. But the firm, by and large, has favored deals with startups working to improve existing clean energy technology. It backs biofuel and combustion engine companies for similar reasons. It wants the planet to go green, while still being able to use existing infrastructure.

TerraPower’s resulting high profile has attracted interest from unlikely sources, including Toshiba, which has been in talks with the company to help it build its traveling-wave reactor.

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