WASHINGTON (Reuters) - The U.S. on Wednesday opened applications for up to $900 million in funding to support the initial domestic deployment of small modular reactor nuclear technology.

WHY IT'S IMPORTANT

President Joe Biden's administration believes nuclear power is critical in the fight against climate change because it generates electricity virtually free from emissions, and that U.S. nuclear power capacity must triple to meet emissions goals.

Small modular reactors (SMRs) differ from traditional larger nuclear plants in that they have simpler designs and can be scaled to demand. Backers say they are inherently safer and will be less costly because they can be built in factories rather than at site. SMRs could be used to generate heat or power and for desalination.

But no U.S. commercial SMR has been built yet. Critics say they will be more expensive to run than larger reactors because they will struggle to achieve economies of scale. Like the large reactors, they will also produce long-lasting radioactive waste for which there is no final depository in the U.S.

HOW WILL THE MONEY BE DISTRIBUTED?

The funds come from the 2021 bipartisan infrastructure law and the Energy Department anticipates offering it in two tiers.

Up to $800 million will go to milestone-based awards for support of first mover teams of utility, reactor vendor, constructor, end users and others.

Up to $100 will spur additional SMR deployments by addressing gaps that have hindered the domestic nuclear industry in areas such as design, licensing, supplier development, and site preparation, the department said.

KEY QUOTE

"Revitalizing America's nuclear sector is key to adding more carbon-free energy to the grid and meeting the needs of our growing economy - from AI and data centers to manufacturing and healthcare," said U.S. Secretary of Energy Jennifer Granholm.