Firms in the US developing a new generation of small nuclear power plants face a fuel challenge

U.S. small nuclear power plants have a Russian mountain to climb

Firms in the United States developing a new generation of small nuclear power plants to help reduce carbon emissions face a major challenge. The trouble they face is only one company sells the fuel they need. And that company is Russian.

That is why the United States is rushing to repurpose some of its weapons-grade uranium stockpiles. Repurposed uranium from nuclear weapons should fuel new advanced reactors. That will help a new industry that seems critical for countries to meet global net-zero emissions targets.

Nuclear power plants need fuel

But, it’s not just a matter of net-zero emissions goal. The energy crisis caused by the Ukraine war has reignited interest in nuclear power. Smaller, next-generation reactors, are more efficient, faster to build, and could accelerate the transition from fossil fuels. These are arguments of the small nuclear power plants proponents.

Alas, they need uranium fuel.

High-Assay Low-Enriched Uranium (HALEU) production is a critical mission, and all efforts to increase production are under examination. The US Department of Energy (DOE) press secretary announced this.

In short, without a reliable source of the high assay low enriched uranium (HALEU) required by the reactors, the developers are concerned that their plants will not receive orders. Without orders, potential fuel producers are unlikely to establish commercial distribution networks to replace Russian uranium.

Russian uranium is out of the question, so now what?

The DOE spokesperson acknowledged the need for immediate action to incentivize establishing a sustainable, market-driven supply of HALEU.

According to the press secretary, the US government is in the final stages of determining how much of its 585.6 tonnes of highly enriched uranium to assign to reactors.

Russian monopoly on HALEU has been a concern for Washington for a long time. But the war in Ukraine has changed the game. Neither the US government nor the companies developing the latest generation reactors want to depend on Moscow.

There is a difference between uranium for the power plants

HALEU is enriched to up to 20%, compared to around 5% for the uranium used in most nuclear power plants. However, only TENEX sells HALEU commercially at the moment. TENEX is a subsidiary of Russia’s state-owned nuclear-energy company Rosatom.

Western countries did not sanction Rosatom over Ukraine. And the only reason for that is because Rosatom is important to the global nuclear industry. Yet, U.S. power plant developers – like X-energy and TerraPower – do not want to depend on a Russian distribution chain.

TerraPower’s director of external affairs, Jeff Navin, told the media that they didn’t have a fuel problem until a few months ago. But, now, after the Russian invasion of Ukraine, they are wary of doing business with Russia.

Nuclear power plants are in the focus, again

Conventional and small nuclear power plants altogether currently produce about 10% of the world’s electricity. But in the midst of the energy crisis, many states are now looking into new nuclear projects to improve their supply of energy and energy security. Of course, the other benefit is to help meet greenhouse gas emission reduction targets.

However, large-scale projects continue to be complicated. There are factors such as high upfront costs, project delays, cost overruns, and competition from cheaper energy sources such as wind they have to surpass.

Thus, several developers have proposed so-called small modular reactors (SMR).

SMRs – a better option for nuclear power plants

Companies such as EDF and Rolls-Royce offer SMRs that use current technologies and utilize the same fuel as traditional reactors. But, nine out of ten of the innovative reactors funded by the Washington administration are structured to use HALEU.

According to supporters, these advanced plants require less frequent recharging and are three times more efficient than traditional models. Some analysts believe this means they will eventually supplant conventional nuclear technology. Yet, the fact is that the models have yet to be tested on a commercial level.

What’s the math?

According to data from the Energy Innovation Reform Project, the average level cost of electricity – the price required for advanced projects to break even – is $60 per megawatt-hour, compared to $97 for conventional plants.

Some analysts believe the price difference is currently narrower. This is due because the smaller advanced reactors using HALEU do not yet benefit from economies of scale from large-scale production.

If we want small nuclear power plants, we have to commercialize HALEU

Companies in both the United States and Europe have plans to commercialize HALEU, but even under the most optimistic scenarios, they estimate that it will take at least five years from the time they make a decision to proceed.

So, this business faces a never-ending circle.

Nobody wants to order any reactors without a secure fuel supply, and nobody wants to invest in a fuel source without having reactor orders.

Fuel supplies are undoubtedly an issue in the decision-making process for firms interested in new advanced reactors. Especially having in mind that nuclear power plants in the United States sourced about 14% of their uranium from Russia last year. When we talk about enrichment services, they were 28% of Russian companies. This data comes from the US Energy Information Administration.

Are there any alternatives for Russian nuclear fuel?

Yes, there are. But, the process of excluding Russian producers will take a while. Long before the war in Ukraine, the US government was aware of Russia’s monopoly on HALEU. And it was obvious that it can stymie the development of advanced reactors that will provide low-carbon energy for the US and European and Asian markets.

In 2019, the government awarded Centrus, the only company outside of Russia with a license to manufacture HALEU, a shared-cost contract to build a prototype facility.

While the facility was supposed to begin producing HALEU this year, production has been delayed until 2023. The delay was in part because of a lack in obtaining storage containers. The other problem was the global pandemic which limited the supply chain.

After the facility is operational, it will take five years for Centrus to begin producing 13 tonnes of HALEU per year. However, this is only one-third of what the DOE estimates is needed for US reactors by 2030.

Other potential HALEU producers lag behind.

Orano, a French state-owned uranium mining, and enrichment company announced it could begin producing HALEU in five to eight years, but will only apply for a production license once it has long-term contracts with customers. So, here comes the eternal circle again.