The U.S. nuclear fuel Gordian knot: The uncertain path forward

Four times they were wrong. People close to the legislative process point to missteps in a variety of places, including the White House, but they also say that they were persistently stymied by the then chairman of the House Energy and Commerce Committee, Rep. Frank Pallone (D., N.J.), who saw the attempts to attach fuel provisions to other legislation as an encroachment on the turf of his committee.

After essentially losing a year on the long road to nuclear fuel security, prospects are looking better—but still far from certain. Just before the Senate went home for its “State work period” (better known as summer vacation), it voted 93–3 to attach the Nuclear Fuel Security Act to the 2023 defense authorization. It is doubtful, however, that this will untie the fuel supply Gordian knot. The House did not attach provisions to its version of the bill; moreover, this is an authorization to spend money, but it is not an appropriation. Even if the House agreed, there would be no money to spend.

That battle will be fought later this fall when both houses return from summer recess.

Various proposals have been floated to “reprogram” previously appropriated yet unspent funds. An obvious target is the $6 billion Civil Nuclear Credit Program, intended to protect current-generation reactors from shutdown when wholesale electricity prices were extremely low. Candidates for the money include Palisades (now shut but a candidate for reopening) and Diablo Canyon (which had its death sentence lifted last fall by the state of California). The size of the credit was based on how low wholesale prices fell, and it is now clear that some of that money will not be spent for its intended purpose.

It is not clear if Congress will produce a budget this fall or resort to a “continuing resolution” (CR), essentially cut-and-pasting last year’s budget instead of writing a new one.

“A CR would be disaster for fuel,” said one lobbyist who follows the negotiations closely. That is because last year Congress provided $100 million for HALEU infrastructure in the Ukraine supplemental. Technically, it wasn’t in the budget, so it wouldn’t be covered by a CR. (The Biden administration is said to be preparing a supplemental aid package for Ukraine that may include funds for nuclear fuel, but it is not yet official.)

At this point, there is movement in Congress, but the prospects for a long-term fix are extremely uncertain. One year ago, Congress allocated just $700 million, in the Inflation Reduction Act, to help establish a supply chain—only about 20 percent of what is needed to make higher-enriched fuel and not enough to address the shortfall in the lower-enriched variety.

But nuclear fuel has not risen to the top of the priority list for Congress. Distracted by everything from the debt ceiling to whether the Department of Defense should accommodate servicemembers who seek abortions, Congress clearly has other problems on its mind.

So, for the time being, conventional light water reactors remain dependent in large part on a flow of material from Russia, whose exports of two other fuels—oil and gas—the West is already trying to squelch. This failure of our policymakers to reach an agreement leaves advanced reactors that require HALEU in limbo (see sidebar on pages 24-25). The nuclear industry is entering into a weird dead-end where advanced reactor designers may in fact have invented the energy equivalent of a better mousetrap—but in a place that can no longer supply the cheese for bait.

Speaking at a Nuclear Innovation Alliance–organized forum, Jacob DeWitte, cofounder and chief executive officer of microreactor developer Oklo, said that fuel is “one of the biggest choke points in terms of looking out over the next few years for the deployment of new nuclear plants,” adding that “the support levels we’re seeing are a starting point, but just a starting point.”

At the same session, Archie Manoharan, director of nuclear strategy at Ultra Safe Nuclear, said, “If you hear the industry talking, it’s brought up at every meeting.” She said USNC is redesigning its reactor to run LEU+ fuel (greater than 5 percent enrichment, up to 10 percent). Though it has less-favorable economics, that fuel might be all that is available. In fact, LEU+, which would also be needed for accident tolerant fuel for current LWRs, isn’t available yet either.

Who is to blame? “Everybody blames each other,” said one person who lobbied on the issue on behalf of a pronuclear nongovernmental organization (NGO). “What’s changed this year is, it is less likely to happen.” The reason, he said, is that the divided Congress may agree on hardly any budgets this year, and that much of the government is likely to be funded by a CR, a last-minute stopgap compromise that simply continues funding for next year at the current level.

What Congress did appropriate last year—in the Inflation Reduction Act—was $700 million, with $500 million for HALEU. An additional $100 million was provided to get started on HALEU transportation systems as well as $100 million for research, development, demonstration, and commercial use. It’s a start, but experts put the price of a full program much higher. “We think the floor is $3.5 billion,” said Nima Ashkeboussi, the fuel supply expert at the Nuclear Energy Institute, the trade association of the nuclear utilities.

An array of Urenco centrifuges. (Photo: Urenco)

The underlying problem is not technical or regulatory, nor is it even a lack of access to financing. Making HALEU “is not rocket science by any stretch of the imagination,” said Kirk Schnoebelen, head of sales at Urenco, an Anglo-German-Dutch consortium that operates the only enrichment plant in the United States. The problem is political uncertainty.

“The market is size-perfect,” said one government official who follows the fuel supply question but was not authorized to speak publicly. “There is enough low-enriched uranium to supply all the reactors we have today.”

Russia is, at the moment, the only commercial source for HALEU. But subtract Russia—either because the United States bans imports or Russia stops exporting—and given time, probably at least five years, Western suppliers will build enrichment capacity to fill the gap. But if they build in anticipation of a cutoff that does not occur, or is later reversed, suppliers will have invested billions of dollars in capacity that has no outlet. And enrichers do not want to build without a guaranteed market.

Nearly all advanced reactors require uranium fuel at an enrichment level roughly quadruple what the industry uses today but manufacturing it would require a substantial capital investment by the producers. Reactor developers do not appear to have the money to sign long-term purchase contracts—and even if they did, their credibility isn’t something that the producers could take to the bank to obtain loans. In American industry, very few companies will make major investments to support products that don’t exist yet. A similar situation is facing the electric vehicle market: private industry is adding electric vehicle chargers at a very slow pace to serve cars that are expected to be sold within the next few years. But unless charging infrastructure is sufficiently and efficiently expanded, those vehicles may not in fact be sold in large numbers.

This impasse could be a show-stopper. The developers can’t launch a new nuclear era without new fuel.

(You could call it a Mexican standoff, a confrontation in which neither party can win, except that in the nuclear context, that wouldn’t be fair to Mexico, which is considering a substantial expansion of its nuclear program.)

An obvious solution would be to return to the structure the industry used in the 1960s when it began: have the government assure the supply. This time around, it could be simpler. Rather than make HALEU, the federal government could simply promise to buy the higher-enriched material at its intermediate stage—uranium hexafluoride—from which it could be processed into various fuel forms. Then the government could sell it to owners of advanced reactors as they needed it. That is the proposal backed by NEI, using a revolving fund that would eventually see the U.S. Treasury repaid. The cost, say advocates, would be approximately zero, and the figure sought by industry to get the ball rolling, $3.5 billion, is substantial but hardly overwhelming in the context of the federal government and Washington’s ambitions to launch a new set of tools for climate protection.

But the government sometimes waffles about its ambitions, about how big it wants to think, despite having promised billions for reactors that can’t work without the right fuel.

Efforts to proceed without government intercession have been modest. At Centrus Energy, the company that formerly operated the now-obsolete gaseous diffusion plants that were built by the U.S. government decades ago, Dan Leistikow, Centrus’s vice president of corporate communications, said that what was needed at this point was “a national investment.” Centrus recently signed a memorandum of understanding with TerraPower, which is developing its Natrium reactor as one of the major projects in the Department of Energy’s Advanced Reactor Demonstration Program, to supply all the HALEU TerraPower will need for meeting its milestones, including deployment in 2030. But Centrus is counting on Congress to provide it with the capital, or with a guaranteed market, which it could use to arrange financing. “It’s hard to finance without a base of reactors ready to take that fuel,” Leistikow said.

Another possibility raised by experts who follow the field is that the MOU is a step toward TerraPower making an investment in Centrus, but thus far neither company has publicly raised that idea. Illustrating the way fuel seems to be a weak link in the plan to deploy new reactors, Leistikow said that Centrus’s plan was to take in uranium already enriched to 5 percent—that is, 1 part U-235 and 19 parts U-238—and enrich that to the upper limit for HALEU, which would be 1 part U-235 and 4 parts U-238. Since natural uranium is 1 part U-235 and 140 parts U-238, starting with 5 percent enriched uranium means that most of the work has already been done. But the only company that enriches uranium in the United States, Urenco, said that it has had no discussions with Centrus about providing low-enriched fuel.

TerraPower (top) and X-energy (bottom) ceremoniously “broke ground” on planned fuel fabrication facilities in October 2022. (Photos: TerraPower, X-energy).

(TerraPower’s Natrium and X-energy’s Xe-100, the principal projects of the ARDP, would appear to be set back by about two years at least owing to the fuel problem. Whether the reactors would have been ready earlier is not clear; their deployment schedule, five to seven years from the first contract award in 2020, was always aggressive. Interestingly, both TerraPower and X-energy announced “ground-breaking ceremonies” for fuel facilities within about one week of each other last October.)

Urenco, meanwhile, recently announced a 15 percent expansion of its output from the Eunice, N.M., plant, raising its yield by about 700,000 separative work units (SWU). With the United States market at about 15 million SWU, the expansion at Urenco, scheduled for completion in early 2027, will come to about 5.3 million. The company didn’t detail what this would cost but did say that it was a purely commercial transaction based on firm contracts for future deliveries.

However, it does not seem likely that Urenco or Centrus can go much further without substantial help, most likely from the federal government.

“This really is a true public-private partnership opportunity,” said David Brown, senior vice president of federal government affairs and public policy at Constellation, the largest U.S. operator of nuclear power plants. “All of the current enrichers are either state-owned or state-supported entities to some extent,” he said. (And the one with the weakest support is the only American entrant: Centrus.)

Brown said that he had some reservations about the revolving fund, however. That would work well for a new product like HALEU, he said, but companies that buy LEU, like his, would not benefit from the government entering the market as a competing buyer.

The bottom line is that the future of nuclear fuel supply is uncertain. While there appear to be just two companies in the game now—both using centrifuges—there is another potential route: laser enrichment. An Australian firm has developed a process called SILEX (separation of isotopes by laser excitation). The technology rights were acquired—then dropped—by a government enrichment complex that was privatized as USEC (U.S. Enrichment Corp.), now known as Centrus. Silex Systems then signed an agreement with GE Hitachi Nuclear Energy—but GE also later dropped the idea. The technology is now owned by Cameco, the giant Canadian uranium mining company (49 percent), and Silex Systems of Australia (51 percent).

“The technology has enormous, broad applications,” said Clay Montgomery, an investor in uranium and related companies, including Silex. Beyond separating isotopes of uranium, it can be used to separate isotopes of lithium, for example. Li-6 produces tritium when struck by a neutron, and reactor designers that want to use lithium in their coolant would therefore prefer Li-7. It can also separate types of silicon, which is of interest to computer chip manufacturers. But it is not clear how close it is to competing with centrifuges.

Global Laser Enrichment’s SILEX technology is officially classified by the U.S. and Australian governments. (Photo: GLE)

There are other possibilities to fill the fuel supply gaps, like using surplus weapons-grade plutonium that the government had previously identified for destruction. This will most likely only be reserved by the industry for the worst-case scenario, however. When asked about using weapons-grade material for fuel, a TerraPower spokesman was careful to avoid any weapons connection: “TerraPower’s Natrium reactor will utilize HALEU, and we are following the progress of DOE’s fuel availability program closely,” said the spokesman. “American advanced nuclear reactors cannot function without HALEU, and we are hopeful that Congress and the [Biden] administration can create and fund a program that leads to commercial availability of HALEU as quickly as possible.”

When that might happen is not clear. Last December, 48 utility companies, NGOs, labor unions, reactor developers, and other nuclear industry entities sent a letter to the House and Senate leaders that did more than ask for help—it used the word implore. But it was not enough.

Several people involved in the legislative negotiations last year identified the obstacle as being Rep. Pallone, then chairman of the House Energy and Commerce Committee. (With the Democrats in the minority in the current session of Congress, he is now the committee’s ranking member.) A spokeswoman for Pallone did not answer questions about what his position was last year, but the proposal may have fallen victim to a turf war; the proposal did not originate in the Energy and Commerce Committee.

Last month during a committee hearing on 15 nuclear bills, Pallone said in a prepared statement that he supported the Nuclear Fuel Security Act. (The parallel bill in the Senate, introduced by Sens. Joe Manchin [D., W.V.] and John Barrasso [R., Wyo.], was recently added to the Senate’s NDAA bill as described earlier in this article. The bill would have the DOE buy enriched uranium, thus guaranteeing a market, and then sell it to reactor owners.)

In a statement provided for this article, Pallone said, “Our nuclear fleet’s dependence on Russian uranium is a massive problem. Right now, there is only a single uranium enrichment facility operating in the United States, and it can only support roughly one-third of the enriched uranium requirements our nuclear fleet needs.

“If we’re serious about weaning ourselves off of Russian uranium, then we have to get serious about making investments in our domestic uranium supply chain. Issues this serious should go through the committee of jurisdiction first, which in this case is the Energy and Commerce Committee”—which is to say, his committee.

Adding to the challenge of persuading Congress that this is an urgent problem, the $700 million allocated last year hasn’t been spent yet. The DOE is still plodding through a laborious process of getting comments on a proposed solicitation, and then issuing the solicitation. The delay in spending what has already been authorized and funded does not help persuade Congress to allocate more.

“We may be waiting a long time for that money to be spent,” said Schnoebelen.

Matt Wald is an independent energy writer and consultant. He is a former policy analyst at the Nuclear Energy Institute and for decades was the energy reporter at the New York Times.