Making New Nuclear Fuel for an Atomic Renaissance | Bloomberg Primer

In Ohio, a private company is producing HALEU, a new nuclear fuel, aiming to fill 11,000 holes with centrifuges to meet the growing demand for nuclear power, driven by a "nuclear renaissance." This resurgence is backed by big tech, with Amazon and Google investing in small modular reactors (SMRs), and political figures like President Trump setting targets for quadrupling U.S. nuclear capacity. The global uranium demand is expected to more than double by 2040, but Russia's Rosatom currently controls nearly 50% of uranium enrichment capacity. Sanctions against Russia are forcing Western countries to re-evaluate and rebuild their nuclear supply chains, from mining to reactor construction. Success in this endeavor could generate new industries and wealth, while failure could undermine confidence in nuclear power for generations. The increased interest in nuclear energy is also fueled by "Nukefluencers" like Isabelle Boemeke, known as "Isodope" on TikTok, who creates short, engaging videos promoting nuclear power. Critics, however, argue that this advocacy glosses over the concerns of anti-nuclear groups. Boemeke, reportedly an investor in a nuclear startup and married to Airbnb co-founder Joe Gebbia, has influenced draft executive orders on nuclear energy regulation. This push marks a significant shift for nuclear power in the U.S., which has seen numerous plant closures in recent decades due to high costs and unpredictable construction timelines, such as the Vogtle Plant in Georgia, which was seven years late and $16 billion over budget. However, the emergence of data centers for artificial intelligence, which require substantial electricity, has led tech companies to reconsider nuclear power. This, combined with activism against the closure of California's Diablo Canyon power plant, has led to its extended operation until at least 2030. Other decommissioned plants, like Three Mile Island, are also being considered for reopening. Since 2020, global investment in nuclear energy is estimated at $300 billion, with ambitious plans across Europe, North America, and Asia. The process of turning uranium ore into nuclear fuel is complex and tightly regulated, given that the same enrichment technology can produce weapons-grade uranium. It begins with converting uranium ore, which contains only about 0.7% fissile U-235, into "yellowcake," then into uranium hexafluoride gas. This gas is spun in centrifuges to separate U-235 from U-238, enriching the U-235 to about 5% for standard nuclear fuel or 20% for HALEU. The enriched gas is then converted into metallic pellets, stacked into rods, and loaded into reactor cores, where nuclear fission generates heat, steam, and electricity. The challenge of radioactive nuclear waste, however, remains unresolved. Companies like NextGen are investing heavily in uranium mining projects, such as Rook One in Canada's Athabasca Basin, estimated to cost $1.5 billion and take over 20 years from discovery to production. The real hurdle, however, lies in uranium enrichment, a capital-intensive and tightly controlled process. Centrus, the only U.S. company licensed to make HALEU, plans to install 11,000 centrifuges to meet future demand, especially as only Russia and China currently produce HALEU at a commercial scale. The U.S. Department of Energy has awarded Centrus and two other fuel makers $900 million to scale up production, expected to take 6-7 years. Betting on HALEU also means betting on next-generation reactors, particularly SMRs, which can be factory-built and assembled on-site. SMRs are considered ideal for remote locations due to reduced refueling needs. However, a "chicken and egg" problem exists: demand for fuel depends on reactors, and reactor construction depends on fuel availability. Companies like TerraPower, founded by Bill Gates, are addressing this by constructing the Natrium SMR in Wyoming, which aims to be the first SMR online in the U.S. Natrium, a Gen 4 reactor, utilizes molten salt storage as a "thermal battery" and was designed using advanced computing. While SMRs offer simplified designs, improved safety, and potentially lower costs per kilowatt, experts disagree on their economic viability, citing first-of-a-kind risks, high maintenance, and regulatory hurdles. The number of SMR designs has grown significantly, indicating a competitive landscape. TerraPower's Natrium project faced a two-year delay due to a lack of HALEU but secured a supply from South Africa. The company has received $2 billion from the U.S. DOE and $1.4 billion in private capital. This shift towards private capital funding, including tech investment, could alleviate the financial burden on taxpayers but centralize control of nuclear power in the private sector. A significant concern with the widespread deployment of SMRs is the increase in radioactive nuclear waste, for which there is currently no long-term solution. While some SMR developers claim their reactors will recycle up to 96% of spent fuel, even minimal exposure can cause irreparable harm. Ironically, some SMR designs might produce more nuclear waste per unit of electricity than larger reactors. The future of nuclear power, and its potential to increase its share in electricity generation, depends on overcoming these technical and regulatory challenges, as well as competition from other energy technologies like gas fracking, wind, and solar with improved battery storage. Despite significant momentum, the industry's slow pace, high costs, and the fragility of the nascent uranium supply chain mean that true energy independence through nuclear power remains uncertain.