Last week the Vermont Senate voted not to relicense the Vermont Yankee beyond its scheduled closing date in March 2012.

This vote isn’t the nail in the facility’s coffin; Vermont’s legislature will likely change course and approve another 20 years of operation for the plant. For one, it produces a third of Vermont’s electricity and is by far its lowest-cost source of generation.

Replacing such a large a quantity of energy in two years with renewable energy and conservation is simply impossible. That means the state would have to purchase more energy from expensive sources in New England, much of it from coal-fired plants. The upshot of such a decision would be higher rates for customers–a heavy blow to the state’s economy as it struggles to emerge from recession.

And the Senate’s vote was basically a reaction to the public relations woes of owner Entergy Corp (NYSE: ETR) and the discovery of the radioactive element tritium in water deposits surrounding the plant. That’s led to close scrutiny of Entergy’s operations at Vermont Yankee and the suspension of several employees.

In the words of at least one state senator, Vermont no longer “trusts” Entergy. The company, however, has one of the best long-term operating records for nuclear power plants in the country. And Governor Jim Douglas seems committed to inking another long-term contract with Entergy to provide low-cost power from Vermont Yankee.

Such an outcome, however, is far from certain. And perhaps more important, it’s a clear sign that anti-nuclear sentiment is alive and well in America. Despite the Obama administration’s support for the next generation of nuclear power plants, new construction looks set to remain a regional issue.

And it’s going to be very difficult to impossible to build new plants in the traditional anti-nuclear states of the Northeast and Pacific Coast–with or without the government’s support. This means that private-sector investment will flow to the Southeast, Southwest and Midwest.

Some readers might be surprise to learn that US Dept of Defense (DOD) supports the construction of new nuclear power facilities. To put it simply, the DOD can’t afford power failures. The majority of military bases are connected to the general grid and backed up with alternative on-site generation when failures occur.

As its demand for electricity has increased, the DOD has intensified its search for permanent, on-site generation. Much of the effort has involved alternative energies and battery technologies, ranging from superconductors built by American Superconductor (NSDQ: AMSC) and others to thermal solar plants, which use solar panels to heat towers of water.

Now, the DOD has turned its interest to nuclear power–specifically a new generation of smaller plants (“mini-nukes”) that can be built modularly to meet the needs of a specific facility. Findings from a major ongoing feasibility study are due out in June, at which point DOD will determine how it will proceed.

The DOD has huge advantages over private-sector utilities in building a new generation of nuclear power plants. Not only does it operate outside the boundaries of traditional state and federal regulation, but it’s also not dependent on fickle investment markets for financing–or on regulators to grant it an adequate return on investment to avoid financial ruin. Finally, DOD has superior access to materials, technology and experienced workers, as well as the ability to get the job done.

It’s still by no means a sure thing when or even if the DOD will roll out such a program.

But companies hooked into these efforts, including American Superconductor, never want for funding, providing a monstrous advantage over any potential competition.

The two units being constructed at the Vogtle site in Georgia–and another built at the Virgil C. Summer Nuclear Generating station in South Carolina–are set to be the first new private-sector nuclear power plants in the US since Comanche Peak Unit 2 in the late 1980s. The Southern Company (NYSE: SO) and SCANA Corp (NYSE: SCG) will be the beneficiaries.

Both plants are huge and expensive to construct. The Vogtle units will produce 2,300 megawatts and are projected to cost of $14 billion. And even in the best case, the units won’t be fully operational until at least 2016.

In contrast, a concerted effort by DOD could get mini-nukes up and running in the next several years–and at a much lower cost. If this plan succeeds and proves economically viable, private sector firms will likely place orders as well. The upshot: A terrific ground floor opportunity in nuclear energy, and a major new wealth building theme.

Roger S. Conrad is chief strategist of Portfolio 2020 and editor of Utility Forecaster.