Oakville, Ont.-based Terrestrial Energy Inc. took a step toward commercial deployment of its molten-salt small nuclear reactor Wednesday as the Canadian Nuclear Safety Commission (CNSC) concluded its reactor design broadly complies with regulatory standards.

Terrestrial is one of a host of global companies racing to commercialize a new generation of reactors – smaller with modular components making it more affordable, and with safety features that address at least some of the concerns over nuclear accidents.

Clearing the first regulatory hurdle at the nuclear safety commission will help Terrestrial to attract customers and investors, with the aim of having a commercial project up and running late in the next decade. Terrestrial has now completed the first phase of a prelicensing review, which provides a regulatory opinion that, given its design features, the company could obtain a licence to construct such a reactor.

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"License-ability is the principle risk for a vendor in commercializing its reactor system," Terrestrial chief executive Simon Irish said in an interview from Oakville. "A customer utility will only agree to buy, build and operate a reactor system if license-ability risk is viewed as acceptably low."

The CNSC does not license a reactor design until there is a specific project to be assessed. The regulator, however, has agreed to do "prelicensing reviews" for several developers of next-generation technology to provide guidance on whether the company would be able to win project approval for a new type of reactor.

Terrestrial will now move on to a Phase 2 review, in which the CNSC makes a detailed assessment of design features to determine whether there would be an fundamental barriers to licensing. In the Phase 1 review, the regulator concluded Terrestrial has substantial work to do to improve its analysis of design and safety issues.

The company – which has received funding from Sustainable Development Technology Canada – is in early-stage discussions with Canadian Nuclear Laboratories (CNL) about locating a commercial reactor at the government-owned, privately managed Chalk River site, 185 kilometres up the Ottawa River from the capital. CNL also recently invited expressions of interest from numerous developers to locate a prototype small modular reactor at the site.

The new-generation reactors are being touted as the future of the nuclear industry, which is looking to reinvent itself and win its share of the low-carbon-energy markets that is developing in response to climate change.

One Terrestrial competitor is TerraPower LLC, a Bellevue, Wash.-based company chaired by Microsoft Corp. founder Bill Gates. TerraPower is partnering with China National Nuclear Power Co. to build a next-generation plant in Hebei province.

Mr. Irish said one 190-megawatt reactor would cost less than $1-billion to build while current ones are typically 1,000-MW and cost closer to $10-billion. Since it does not rely on power to cool down, the molten salt reactor is impervious to the kind of catastrophic meltdown that occurred at Japan's Fukushima Daiichi site after an earthquake and tidal wave in 2011, he said.

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However, critics argue the industry's bet on small modular reactors will likely fizzle, as have past attempts to introduce new technology such as the Advanced Candu Reactor.

"Small modular reactors are just another expensive distraction away from the global transition to renewable-based energy system," said Shawn-Patrick Stensil, energy analyst with Greenpeace Canada. "Winning an approval from the industry-friendly CNSC isn't difficult. The real test for these untested designs is to win social acceptance and compete against the declining cost of renewables."