Nuclear Fuel Funding Deal Confronts Global Market Uncertainties

A congressional deal authorizing $2.7 billion for uranium enrichment was a long-sought win for the nuclear industry as it seeks to secure a fuel supply for the current fleet of plants and advanced reactors in the pipeline, industry experts said.

Now, the impact of that money hinges on a hard-to-predict market that could swing wildly with supply constraints and the development of future reactors that have yet to be demonstrated. Most immediately, the price effects of any blocking of US imports of Russian uranium, the largest foreign provider of the nuclear power fuel, could influence the Energy Department’s strategy for setting up a program to grow enrichment capacity in the US.

Legislation aimed at blocking Russian imports won broad bipartisan support in the US House and Senate, but they have been held up by Sen. Ted Cruz (R-Texas) over an unrelated matter. Cruz put a hold on the House-passed uranium ban legislation in December after the House stripped from the defense spending bill a provision designed to speed up the construction of semiconductor projects.

A spokesperson for Cruz didn’t comment Wednesday on whether the senator was working toward a deal.

Nuclear proponents have said the funding is crucial to keeping US nuclear plants online and to wean off Russian influence on a key energy fuel.

“We are seeing incredible movements here—this is a big domino we’ve been waiting for,” said Rowen Price, a policy adviser on Third Way’s nuclear energy team.

“The work isn’t done” on ensuring the final piece, a uranium import ban, is enacted, Price said. “We’re hopeful that any of the political squabbles that have been holding it up—which are completely unrelated to the content of the bill—we’re hopeful those can be overcome with increased pressure from existing appropriations.”

Chicken or Egg

Even if uranium import restrictions are put into place, the market could be hard to predict, said Patrick White, research director for the Nuclear Innovation Alliance, on the sidelines of the Nuclear Regulatory Commission’s annual conference in suburban Washington.

While demand from the current fleet of more than 90 nuclear reactors is relatively well-defined, the need for more highly enriched fuel for an anticipated wave of advanced reactors is tougher to sketch out, White said. More than 40 metric tons of advanced reactor fuel will be needed by 2030, with additional amounts required each year to run a new fleet, the Energy Department estimates.

“It’s hard for enrichment companies to make investments in new infrastructure if they don’t have guaranteed contracts and they don’t know what the demand is like,” White said. “But it’s hard for advanced reactor developers to sign firm contracts for fuel, because their customers want to know where the supply chain is for this.”

In December, the NIA published a report suggesting avenues to seed a market for advanced reactor fuel, known as high-assay low-enriched uranium, or HALEU. The department could explore cost-share agreements on building or expanding new facilities, pre-purchases of uranium enrichment services, or another arrangement to hold onto the fuel for future uses, White said.

“The DOE can come in and break that chicken-or-the-egg problem,” White said.

The funding will “support the expansion of the domestic enriched uranium supply chain, which is critical to fueling both existing and future nuclear reactors,” Jon Carmack, the department’s deputy assistant secretary for nuclear fuel cycle and supply chain, said in a statement. “DOE looks forward to advancing the funds in concert with import restrictions on enriched uranium from Russia.”

The DOE will be building on momentum from an existing effort to build a HALEU market using about $700 million from the Inflation Reduction Act of 2022. It recently issued two requests for proposals and is collecting industry feedback.

“This isn’t the end of the conversation,” said Jackie Toth, managing director of policy and external affairs at Good Energy Collective, a progressive nuclear advocacy organization. “Now that the funding has been passed, I think we in the NGO community will be working in conversation with the Energy Department to think about how best to structure these programs” to see the most enrichment capabilities stand up.

Nuclear Build-out?

A dramatic build-out of enrichment capacity has concerned some skeptics that question whether nuclear is safe and whether high-tech reactors will deliver on their promises. Last November, the most prominent advanced reactor project collapsed amid rising costs.

Taxpayer money could be mismanaged because the language in uranium ban legislation gives plenty of wiggle room to keep Russian imports flowing, said Edwin Lyman, director of nuclear power safety at the Union of Concerned Scientists.

The House and Senate bills both allow the Energy Department to issue waivers through 2027 to allow Russian imports if no alternative source of reactor fuel is found or if allowing enriched uranium imports from Russia is determined to be in the national interest.

The industry is “just seeking a lot of US taxpayer money to subsidize this domestic industry which could not stand up on its own two feet without that huge boost,” Lyman said. “I think that raises serious policy and taxpayer stewardship questions.”

But the Biden administration and a bipartisan group of lawmakers are largely backing the effort, pointing to nuclear’s ability to provide a steady supply of carbon-free power.

Strong Support

At the NRC’s conference this week, the incentives for nuclear fuel took center stage in a packed hotel ballroom.

NRC Chair Christopher T. Hanson said the commission’s efforts to issue licenses for increased enrichment will be “as aggressive as they are on reactors.”

“So much of what we are doing in the reactor space relies on all pieces of the fuel cycle seamlessly working together,” Hanson said.

The market dynamics and US incentives have created solid demand for enriched fuel for both currently operating reactors and newer small modular reactors, or SMRs, said John M.A. Donelson, senior vice president and chief marketing officer at Centrus Energy Corp. In November 2023, a partnership between Centrus and the DOE produced 20 kilograms of the fuel at a demonstration facility in Piketon, Ohio.

“We see a very sustainable business with the existing fleet, with potentially more reactors being built in countries like the UK, Poland, and the Czech Republic,” Donelson said during a session on nuclear fuel in a packed ballroom. “Any boost we get from the SMRs gives us another platform to succeed.”

At Urenco Group—a British-German-Dutch nuclear fuels company that runs the only operating US enrichment facility, in New Mexico—the US funding will “help to inform investment decisions,” said Mary Neumayr, director of government affairs for Urenco USA.

“We see this as a very significant signal of what I think is quite strong bipartisan support,” Neumayr said on the sidelines of the conference.

The final piece of the puzzle, the uranium import restrictions, would “provide certainty for the companies investing in the supply chain that those new assets they invest in will not be stranded,” she said.