Today’s announcement that engineering and construction giant Bechtel will join forces with Babcock & Wilcox to build modular nuclear reactors is a big deal.

On its own, B&W had plenty of advantages in the emerging modular reactor sector. For decades, it has been building boilers and other power plant components. It also has decades of experience in building small reactors for the US Navy. But now that it has teamed with Bechtel, B&W has the potential to access Bechtel’s many clients in global power generation market. Bechtel currently has some 3,000 people employed on nuclear-related projects and it has engineering or construction operations in some 50 countries.

As B&W’s president and CEO, Chris Mowry told me last year, the company sees a growth opportunity in deploying nuclear reactors that are smaller than the traditional 1,000+ megawatt reactors that are now in use around the world. In particular, the smaller reactor – B&W is focusing on a power plant with 125 MW of output – would be far less expensive than its larger cousins. And that lower cost could make it more attractive for a variety of developing countries as well as utilities in wealthy countries that need relatively low-cost, zero-carbon power generation capacity.

To be clear, the future of modular reactors is not assured. Indeed, the two companies say that the earliest they expect to deploy one of the new reactors is 2020. That long delay is largely due to the myriad challenges associated with getting the reactor design approved by the Nuclear Regulatory Commission. In addition to the regulatory hurdles, the two companies outlined other risks in their joint press release including possible delays in manufacturing the new reactors and they made it clear that the new design “may not be commercially viable.”

The timing of the announcement is interesting for several reasons. It comes just 13 months after B&W announced that it was entering the modular reactor business. And it comes less than two weeks after B&W’s parent company, Houston-based McDermott International, announced that it would spin off B&W at the end of July. Stockholders of record in McDermott as of July 9 will get one share of B&W for each two shares that they hold in McDermott. After that date, B&W will be traded as a stand-along public company.

The alliance between B&W and Bechtel may be good news for proponents of nuclear power in general and modular reactors in particular, (I qualify in both categories) but it will likely prove to be a heavy blow to start-up companies like Hyperion Power Generation and NuScale Power, both of which have been promoting their modular reactor concepts. Hyperion has a 25 MW reactor design and NuScale is promoting a 40 MW concept. But both companies are backed by venture capitalists. And in a sector where deep pockets are essential – remember it could be a decade before B&W expects to actually have one of their reactors built and generating electrons – the odds seem to be increasingly difficult for small start ups.

B&W already had major advantages over Hyperion and NuScale. By teaming with Bechtel, those advantages just got a lot bigger. And while those advantages are formidable, it remains to be seen whether companies as big as Bechtel and B&W, even by combining their considerable resources, will be able to turn the laudable concept of commercial modular reactors into a reality.