Nuclear fuel crisis could foil industry's US revival

E&E News

3 days ago

The stars are aligning for U.S. nuclear power.
Ambitious companies — with the backing of Amazon, Google and other technology titans — are working on safer and cheaper nuclear reactors. Lawmakers on Capitol Hill are eager to facilitate an industry comeback, and the Trump administration has made nuclear development a priority.
But America's limited capacity to supply its own nuclear fuel has dampened some of the exuberance out of Washington.
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'We are in the game, but we've got to get better at the game if we are ever going to be able to power our new nuclear fleet,' said Rep. Chuck Fleischmann (R-Tenn), chair of the Energy and Water Development Appropriations Subcommittee.
The Department of Energy has started to pull startup nuclear companies into the uranium enrichment business. Earlier this month, San Francisco-based General Matter said it would build a $1.5 billion uranium enrichment facility in Paducah, Kentucky, the site of a former U.S. government enrichment plant.
The company led by former SpaceX engineer Scott Nolan has said it can produce at a lower cost the type of enriched uranium sought out by developers of advanced nuclear reactors.
But the United States' decision to ban Russian uranium imports — to break Moscow's dominance over global supply and as a response to the war in Ukraine — has ratcheted up the pressure to generate an American supply.
That's compounded by the limited success that U.S. companies in the nuclear fuel business have had since the Cold War. The lone U.S. commercial uranium enrichment facility, located in New Mexico, has seen uranium production go down, not up, since 2018.
It wasn't always this way.
In 1985, the U.S. was the nuclear fuel leader. Government-operated enrichment plants processed more than six times the uranium the nation enriches today and nearly four times what American reactors consumed. These facilities — legacy operations of the Atomic Energy Commission and later the Department of Energy — served national security, utility needs and international markets alike.
But the Cold War's end triggered sweeping changes. The collapse of the Soviet threat changed the U.S. government's calculus on domestic nuclear fuel production, and it led to supply agreements with Russian suppliers. China wasn't quite the strategic competitor that it is today, and on the energy front, U.S. utilities had stopped building new reactors.
'So it made a lot of sense to be like, 'Why are we doing this as a government? Let's get out of that business,'' said Kurt Terrani, a nuclear engineer and CEO of Oak Ridge, Tennessee-based Standard Nuclear.
With the anticipation that the U.S. would always have access to foreign enrichment supplies, the U.S. Enrichment Corp. spun off from the Energy Department in 1992 and fully privatized in 1998.
'The privatization of the United States Enrichment Corporation was potentially a good idea at the time,' said Katy Huff, a former DOE official and now a professor at the University of Illinois Urbana-Champaign. 'But frankly, in light of our global economic system and the state-backed enterprises that it competes with, the enrichment market in the United States being privatized puts U.S. producers at a disadvantage compared to the remainder of the market.'
'Then Fukushima happened'
U.S. Enrichment's last large-scale enrichment operations closed in 2013, and the company was renamed Centrus Energy. It had locked up contracts in the U.S., Europe and Japan.
'Then Fukushima happened,' said Jonathan Hinze, president at UxC, a nuclear consulting firm, referring to the nuclear accident in Japan in 2011. 'The bottom fell out of the market, and they never really recovered from that.'
The price of enriched uranium declined from a peak of $155 in 2011 to $34 per unit measurement in 2018 following the events in Japan and the decline in global demand.
To fulfill national security missions, the U.S. must use its own enrichment technology, as long-standing nonproliferation agreements forbid the use of foreign-origin technology for such purposes. High-assay, low-enriched uranium, or HALEU, is enriched to a higher purity than conventional reactor fuel and is generally needed for Generation IV nuclear reactor designs.
In November 2023, amid growing progress on the development of Generation IV reactors, Centrus Energy, based in Bethesda, Maryland, produced its first batch of HALEU. With Centrus' inaugural batch and plans to expand their centrifuge cascade, the U.S. might yet break Russia's de facto monopoly on advanced reactor fuel.
But expanding Centrus' Ohio plant will require billions of dollars in investment, customer commitments and a level of sustained political backing that has often eluded U.S. nuclear initiatives.
Since the rebrand, Centrus has yet to establish commercial-scale uranium enrichment, and it's squabbled with DOE.
A July audit from the DOE's inspector general questioned a 2019 contract with Centrus. The audit raised concerns about DOE's procedures and Centrus' financial viability at the time, saying the contract potentially prevented the government from getting the best value.
'The inability by Centrus to deliver sufficient quantities of cost-competitive SWUs in the U.S. market has resulted in the U.S. nuclear power fleet sourcing two-thirds to 75 percent of its enriched uranium needs from Europe and Russia,' said Brian Wirth, head of the University of Tennessee's nuclear engineering department.
'SWU' measures the ability to separate isotopes during the uranium enrichment process. It's critical for developing nuclear fuel.
'Based on this record, it is very difficult to be confident in their ability to deliver on the increased enrichment demands' to supply the HALEU required by small modular reactors, Wirth continued.
But Hinze, the consultant, says Centrus was largely responding to the post-Fukushima market. Now, nuclear power's apparent comeback could pull uranium enrichment home.
'Until the last few years, you haven't had any market interest in having them develop a commercial enrichment plan,' Hinze said. 'But I would argue that has changed now. The tides are turning, so this could be different.'
'Chicken and egg'
Although Urenco, a consortium owned by the British and Dutch governments and two German utilities, has been reducing production and some would criticize Centrus' historic neglect of enrichment infrastructure, the uranium enrichment crisis facing the U.S. is predominantly driven by inconsistent market signals.
U.S. Enrichment was privatized in the 1990s, yet in the past 10 years, the federal government has increasingly offered subsidies to the sector. In the early 2000s, expectations were high for a nuclear renaissance before the 2011 Fukushima nuclear accident soured utility, government and public appetite for the source.
'This back and forth makes your infrastructure disappear,' said Terrani of Standard Nuclear. 'That needs to come back up. It confuses the markets. You're either market-based or you're not.'
The market signals are even weaker for HALEU, said Dale Klein, a mechanical engineering professor at the University of Texas and former chair of the Nuclear Regulatory Commission. He noted that North America doesn't yet have any commercial reactors operating that would use HALEU. That's a problem for the dozen-plus entities planning to build Generation IV reactors.
'It is a chicken and egg,' Klein said. 'The fuel enrichers are not going to make the fuel unless they know they've got a market.'
'You have to put in a lot more centrifuges, and you're not sure what that market is going to be because none of these advanced reactors are running,' he continued. 'It's an unsolved problem.'
Shrinking anchor in the desert
Centrus has competitors. Orano, a French government-owned company, in 2024 announced plans to build a multibillion-dollar enrichment facility in Oak Ridge. But it has some limitations that Centrus doesn't.
Orano's U.S. branch has hyped the proposed facility, but its chief executive in Paris said that they will not make a financial investment decision until 2027. In contrast, Centrus argues that it's ready to scale up its Ohio facility — which is already enriching small amounts of uranium — as soon as it secures federal backing.
'Our facility is already licensed. We've secured $2 billion in customer contracts. As soon as federal funding is awarded, we'll pair it with private dollars and get to work,' Dan Leistikow, Centrus' vice president of corporate communications, wrote in an email. 'Centrus offers a fully American solution: proven U.S. technology, built by American workers.'
Fleischmann thinks that last point could be key to the company's success. 'Centrus' strength is that they're American, which means ultimately, if they get their act together, they'll be able to produce weapons-grade uranium in addition to HALEU,' he said.
The other major U.S. operator is Urenco. Opened in 2010, an enrichment plant in Eunice, New Mexico, is designed to produce one-third of U.S. utility requirements for enriched uranium.
Yet in 2024, capacity was significantly less.
Data compiled from Urenco's annual reports shows the plant's annual capacity has dropped roughly 12 percent since 2018. No commercial enrichment facility in the U.S. or Europe lost that much capacity over the same time frame.
Experts say the reason isn't demand for fuel. If anything, demand is rising.
Urenco uses 'TC-21' centrifuge machines that are bigger and far more powerful than earlier centrifuge technology known as the TC-12. Urenco also deploys the bigger centrifuges in Germany and a few at Almelo in the Netherlands. Those two plants saw a respective 10 percent and 4 percent decline in enrichment capacity since 2018.
Public information is limited on failure rates of the larger centrifuges. But technical experts in academia and the industry interviewed for this story say the large TC-21s enrich a lot of uranium but tend to fail more quickly than the earlier model.
'The TC-12, some of those were running for like decades uninterrupted, which is an incredible feat,' said Terrani of Standard Nuclear.
A Urenco-Orano joint venture keeps details about the technology closely guarded and have not responded to POLITICO's E&E News' request for failure rates of the two centrifuge models.
Urenco USA's Director of Communications Jeremy Derryberry said that declining demand was the main reason for Eunice's decline in capacity.
Uranium prices sank after Fukushima in 2011, only months after the New Mexico facility opened. In the last three years, prices have spiked due to restrictions on trade with Russia.
'At any enrichment facility, machine failures are to be expected, and ours are within our forecasts and expectations,' Derryberry said. 'We are actively deploying the TC-21 at Urenco sites in campaigns to expand new capacity and to refurbish existing capacity, and we believe it is a superior technology to what is being deployed at other facilities around the world.'
Urenco is actively expanding its operations in New Mexico.