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MAY 11, 2022

Greetings from Miami, where I’m moderating a few panels at the Aspen Institute’s inaugural climate-themed ideas festival.

ICYMI, I joined the Energy Gang podcast last week.

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Send your energy photos, story tips and more to news@ciphernews.com or reach us directly at amy@ciphernews.com and anca@ciphernews.com.

HARDER LINE COLUMN
Russian invasion prompts scramble for nuclear fuel
BY: AMY HARDER

In the wake of Russia’s invasion into Ukraine, Washington is rushing to find new sources of a particular kind of advanced nuclear fuel whose sole commercial producer is a Russian company.

The scramble is for high-assay, low-enriched uranium fuel (HALEU—pronounced hey-lou). It’s needed in nine out of the 10 reactors awarded funds in a U.S. Energy Department program, Undersecretary of Energy Geri Richmond told lawmakers during a March hearing.

TENEX, a subsidiary of the Russian state-owned Rosatom, is the world’s only major commercial supplier of the fuel.

“Russia was always seen as problematic,” said Alan Ahn, senior resident fellow for the climate and energy program at Third Way, a centrist think tank. “Those fears played out with the invasion.”

The federal government and the nuclear industry had always planned on establishing domestic processing for this fuel, but TENEX was going to provide the initial fuel batches.

This HALEU dilemma is an extreme example of how America lacks the capacity to make a range of materials the world needs to tackle climate change. Like solar panels and critical minerals, nuclear fuel comes largely from places other than the United States, a decades-long trend set in motion due to myriad domestic and geopolitical factors.

HALEU might sound complicated, but the big picture is simple. Nuclear power provides 10% of the world’s carbon-free electricity, second only to hydropower. In the U.S., that share is more than half. HALEU would enable a new generation of reactors to balance out variable wind and solar power and ensure a secure energy transition.

Nuclear power has been a controversial source of zero-emitting power. Worries persist about nuclear accidents, proliferation risk and how to store radioactive waste safely. Costs have also ballooned for many projects.

Despite those obstacles, Russia’s invasion is prompting experts, led by the International Energy Agency, to call on the world (especially Europe) to embrace nuclear power as a stable and domestic source of energy.

HALEU is enriched to higher levels than current nuclear fuel, but still far less than weapons-grade uranium. Thus, it’s more efficient and produces less waste compared to current fuel, according to an April 14 analysis by BloombergNEF shared with Cipher.

Yet the analysis warns: “Developing a domestic supply would be an expensive proposition and presents a regulatory gauntlet.”

Two U.S.-based companies, TerraPower and X-energy, are leading the charge. They have received Energy Department awards in 2020 supported by over $3.2 billion total in federal funds authorized in the infrastructure law that private dollars would match. The awards require projects to be complete in seven years and the reactors will need the HALEU a year or two earlier than that.

To meet those deadlines, the companies had initially considered acquiring HALEU from TENEX. Although Rosatom hasn’t been sanctioned (yet), the companies have indicated they no longer see supply from TENEX as a viable option.

The Energy Department is “exploring feasible options to address this issue,” Richmond said in response to questions from Sen. John Barrasso (R-Wyo.) at the March hearing. “Any solution will require a substantial and sustained source of government funding.”

For initial fuel batches, the Energy Department is considering whether it could “downblend” current domestic sources of highly enriched uranium (suitable for weapons but used for other purposes, too) to the levels needed for HALEU, an Energy Department spokesperson told Cipher.

“We are also interfacing with X-energy and TerraPower, as well as other reactor technology developers, to determine if various downblended products will meet their needs,” the spokesperson said by email.

Sourcing HALEU from TENEX would have been the most cost-effective option for technologies whose costs face scrutiny, a BloombergNEF expert says.

“Downblending is certainly an option, but it’s a more costly and inefficient option,” said Chris Gadomski, head of nuclear research at BloombergNEF. “You’re doing more work for the same result.”

In a nod to the fact that Russia’s TENEX was never in long-term plans, the Energy Department began a bureaucratic process in December seeking information from industry about how to supply domestic sources of HALEU. The next step is for the department to seek proposals, which industry experts hope happens by this summer.

The House-passed Build Back Better bill, which stalled in the Senate earlier this year, would have put $500 million toward supporting HALEU supply, Richmond said at the hearing. Congressional negotiations are underway to revive some energy portions of that bill.

“We are stuck in this loop of the commercial market demand signal not being firm for capacity to justify capital investment by an enrichment company,” said Ben Reinke, senior director for corporate strategy at X-energy. “If you can help backstop initial deployment with support from DOE, all this flows naturally.”

A U.S.-based enrichment firm, Centrus Energy Corp., has been working with the Energy Department to build a demonstration-sized plant in Ohio. That facility could begin producing small quantities of HALEU within a year or so—if the company wins an additional competitive contract with the department.

The initial amount pales in comparison to what’s needed for first batches, Ahn of Third Way says.

Dan Leistikow, vice president of corporate communications for Centrus, said: “With appropriate funding and offtake commitments, we could scale it up to any level of production.”

Editor’s note: One of TerraPower's primary investors is Bill Gates, who is chairman of the board. Gates is also the founder of Breakthrough Energy, which supports Cipher.

Lunchtime Reads and Hot Takes
Tony Fadell thinks capitalism can solve the climate crisis. It just needs a few tweaksProtocol
Amy’s take: What a cool way to tweak capitalism, by redefining qualified small businesses (QSBs—new acronym to me) to be just climate-focused companies.

A Fight Over America’s Energy Future Erupts on the Canadian BorderThe New York Times
Amy’s take: I wonder if Sandi Howard, the local Maine resident who is cited as being an initial opponent to this project, thought twice about taking the same side as companies worried about their natural gas profits.

Vermont Senate approves bill to create “clean heat standard”AP News
Amy’s take: Oh this is interesting, though this is a rare case where I wish the story were longer. Many unanswered questions!

World could see 1.5°C rise in next five years: World Meteorological OrganizationCNBC TV18
Anca’s take: While the findings from the World Meteorological Organization suggest crossing that threshold might only last for a brief period in 2026, it’s nonetheless a reality check that the world is not doing enough to limit global warming and catastrophic climate change consequences are real.

Heat Pumps Will Change Everything—and Not EnoughForeign Policy
Amy’s take: This article hints at the higher costs heat pumps—and specifically renovating existing buildings to accommodate them—but I would like to see more acknowledgement of that hurdle.

Exclusive: Germany prepares crisis plan for abrupt end to Russian gasReuters
Anca’s take: The European Commission is preparing to release next week a plan for the EU to shed Russian gas in just a few years, but this article is a reminder that, in the short term, countries like Germany are in a bind if Russia decides to stop the flows first: “The preparations show the heightened state of alert about supplies of the gas that powers Europe's biggest economy and is critical for the production of steel, plastics and cars.”

Where Lawns Are Outlawed (and Dug Up, and Carted Away) The New York Times
Amy’s take: Welcome to global warming, complete with water patrol and outlaw grass. Serious question: What about golf courses!?

LEAK: EU Commission considering higher renewable energy target for 2030 Euractiv
Anca’s take: This is also part of the big plan mentioned above and shows the Commission is really beefing measures to help the 27-member bloc advance in its clean energy uptake. The other interesting bit here is that it is considering making the installation of rooftop solar panels mandatory on all new buildings by next year.

More of what we're reading:
  • Natural gas prices in Europe jump after Ukraine blocks Russian flows — CNBC
  • EU considers looser green standards as it seeks to replace Russian fossil fuels — Financial Times (paywall)
  • How the federal government can ensure carbon dioxide removal succeeds — Protocol
  • Carbon credit platform Pachama raises $55 mln in latest funding round — Reuters
  • The birth of the carbon removal market — Energy Monitor
  • Rotterdam port hikes 2030 estimate for hydrogen supplies — Reuters
DATA DIVE
Demand for advanced nuclear fuel set to soar
Source: Nuclear Energy Institute

BY: AMY HARDER


Demand for HALEU is set to grow significantly in the coming years if numerous companies follow through on plans to build advanced nuclear reactors, according to data compiled by the industry’s trade group.

This amount is a small fraction of how much fuel current reactors use, which is around 2,000 metric tons of enriched uranium a year, Nuclear Energy Institute CEO and President Maria Korsnick said in a letter to the department in December.

The imminent problem is finding an alternative supplier for initial batches of the fuel, as we lay out in the main article today.

The longer-term outlook reflects a classic chicken and egg dilemma: Advanced reactor companies need assurances they can procure HALEU, but efforts to establish HALEU facilities in the U.S. need to know demand will come for their product.

“The most important question when we talk with customers is: Where will I get a reliable supply of HALEU for the 60-year life of the asset?” said Reinke of X-energy. “If that is not available, what is my investment proposition?”

AND FINALLY...
Small-town charging
My tiny little hometown of Sprague, WA—population less than 500—officially has two fast-charging stations for electric vehicles (and still zero traffic lights). A spokesperson for Avista, the local utility that installed them, said the site was chosen because it’s at the intersection of a major interstate and state highway. I snapped this photo a couple weeks ago while visiting family. The old trucks in the background are perhaps Sprague’s most famous landmark. Now they offer a juxtaposition of our changing times! For those driving through, they should be in service as soon as Friday.

Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

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