UPDATE 1-McDermott unit to unveil small-scale reactor

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By Eileen O'Grady

Houston, June 9 (Reuters) - Babcock & Wilcox, a unit of Houston-based McDermott International (MDR.N), will announce a plan on Wednesday to seek regulatory approval for a new small-scale nuclear reactor design, according to industry sources.

The new reactor design is expected to produce about 125 to 150 megawatts -- about one-tenth the size of most commercially operating reactors -- and has some "unique features," one source said on condition of anonymity.

Wednesday's announcement in Washington, billed as a "major commercial nuclear power product announcement," will include officials from Virginia-based Babcock & Wilcox, along with executives from Exelon Corp, (EXC.N) the largest U.S. nuclear operator, and the federally-owned Tennessee Valley Authority.

Officials with Babcock & Wilcox could not be reached immediately for comment.

Nuclear power generates about 20 percent of U.S. electricity and proponents say nuclear energy is attractive because it produces no heat-trapping carbon dioxide and other gas blamed for global warming.

But the recession and tight credit markets have pared some predictions for a nuclear "renaissance" given current cost estimates ranging from $5 billion to $12 billion for a commercial-scale reactors that can generate from 1,100 to 1,600 MW of power.

The smaller-scale reactor design could be cheaper and offer more flexibility for utilities than larger reactors, sources said. The smaller reactors could be built to meet slower power growth or used in multiples to satisfy faster demand growth.