Terrapower, a startup funded in part by Nathan Myhrvold and Bill Gates, is moving closer to building a new type of nuclear reactor called a traveling wave reactor that runs on an abundant form of uranium. The company sees it as a possible alternative to fusion reactors, which are also valued for their potential to produce power from a nearly inexhaustible source of fuel.

Work on Terrapower’s reactor design began in 2006. Since then, the company has changed its original design to make the reactor look more like a conventional one. The changes would make the reactor easier to engineer and build. The company has also calculated precise dimensions and performance parameters for the reactor. Terrapower expects to begin construction of a 500-megawatt demonstration plant in 2016 and start it up in 2020. It’s working with a consortium of national labs, universities, and corporations to overcome the primary technical challenge of the new reactor: developing new materials that can withstand use in the reactor core for decades at a time. It has yet to secure a site for an experimental plant—or the funding to build it.

The reactor is designed to be safer than conventional nuclear reactors because it doesn’t require electricity to run cooling systems to prevent a meltdown. But the new reactor doesn’t solve what is probably the biggest problem facing nuclear power today: the high cost of building them. John Gilleland, Terrapower’s CEO, says the company expects the reactors to cost about as much to build as conventional ones, “but the jury is still not in on that.”

Conventional reactors generate heat and electricity as a result of the fission of a rare form of uranium—uranium 235. In a traveling wave reactor, a small amount of uranium 235 is used to start up the reactor. The neutrons the reactor produces then convert the far more abundant uranium 238 into plutonium 239, a fissile material that can generate the heat needed for nuclear power. Uranium 238 is readily available in part because it’s a waste product of the enrichment processes used to make conventional nuclear fuel. It may also be affordable in the future to extract uranium 238 from seawater if demand for nuclear fuel is high. Terrapower says there’s enough of this fuel to supply the world with power for a million years, even if everyone were to use as much power as people in the United States do.

In the original Terrapower design, the reactor core was filled with a large collection of uranium 238. The process of converting it starts at one end, producing plutonium that’s immediately split to generate heat and convert more uranium to plutonium. The reaction moves from one end to the other—in a “traveling wave”—until no more reactions can occur.

In the new design, the reactions all take place near the reactor’s center instead of starting at one end and moving to the other. To start, uranium 235 fuel rods are arranged in the center of the reactor. Surrounding these rods are ones made up of uranium 238. As the nuclear reactions proceed, the uranium 238 rods closest to the core are the first to be converted into plutonium, which is then used up in fission reactions that produce yet more plutonium in nearby fuel rods. As the innermost fuel rods are used up, they’re taken out of the center using a remote-controlled mechanical device and moved to the periphery of the reactor. The remaining uranium 238 rods—including those that were close enough to the center that some of the uranium has been converted to plutonium—are then shuffled toward the center to take the place of the spent fuel.

In this system, the heat is always generated in about the same area within the reactor core—near the center. As a result, it’s easier to engineer the systems to extract and use the heat to generate electricity.

One challenge with this design is ensuring that the steel cladding that contains the fuel in the fuel rods can survive exposure to decades of radiation. Current materials aren’t good enough: for one thing, they start to swell, which would close off the spaces between the fuel rods through which coolant is supposed to flow. To last 40 years, the materials would need to be made two to three times more durable, Terrapower says.

The company is using computer models to anticipate how currently available materials would change over time, and is developing reactor designs that anticipate these changes. For example, if it’s known that a material would swell in the conditions inside the reactor, the spaces between the fuel rods would be designed to accommodate this swelling, says Doug Adkisson, director of operations at Terrapower.

Terrapower has also developed designs for a passive cooling system. Like many other advanced reactor designs, Terrapower’s uses molten sodium metal as the coolant. Sodium takes much longer to boil than water, which gives plant operators more time to respond to accidents. It would also be possible to use natural convection and air cooling in the event of a power outage—coolant wouldn’t have to be continuously pumped into the reactor, as was the case at Fukushima. One danger of using sodium, however, is that it reacts violently when it’s exposed to air or water.

Terrapower’s next steps include finalizing the design and finding partners to build the plants. It’s been in talks with organizations in China, Russia, and India. Gilleland says the company expects to have an announcement about partners within the next few months.