The United States is preparing a revolution in nuclear power. By 2050, it wants to quadruple its nuclear capacity, reaching 400 GWe. Small modular reactors (SMRs) are the key – cheaper and faster to build than giant plants like Vogtle 3 and 4 in Georgia, which cost over $16 billion. The problem is uranium. The US imports most of its supply from Russia, and every new SMR will increase the deficit by up to 25,000 tons per year.
The United States is preparing for an intensive expansion of its nuclear power plants. Although it currently has the most in the world, it wants to maintain this primacy in competition with China. In 2025, the administration set a goal to quadruple the capacity of US nuclear power plants by 2050 (to 400 GWe) and to deploy advanced reactors in the near future.
The well-known American company Westinghouse designed its first fully commercial pressurized water reactor (PWR) with a capacity of 250 MWe, Yankee Rowe. It was commissioned in 1960 and operated until 1992. The development of nuclear energy in the US experienced a serious regress after the Three Mile Island accident in 1979, which in fact confirmed the very conservative design principles of Western reactors, as no one was injured nor exposed to harmful radiation.
Many orders and projects were canceled or suspended, and the nuclear power plant construction industry fell into stagnation for two decades. Nevertheless, over 100 commercial power reactors were put into operation by 1990. Currently, almost all US nuclear generating capacity comes from reactors built between 1967 and 1990. From 1977 to 2013, no new construction was started, mainly because for many years, generating electricity from natural gas was considered more economically attractive, and moreover, construction was often delayed in the 1970s and 1980s.
Criticism of large Nuclear Power Plants
In early May of this year, Matt Badiali, a well-known American financier, industrialist, and commodity expert, writes on the economic portal The Daily Reckoning that the current American model of building large nuclear power plants is becoming history. These types of plants are extremely expensive.
The latest completed nuclear reactors, Vogtle Units 3 and 4 in Georgia, cost a staggering $15,000 per kW, or about $16-17 billion for 1000 MW. Their planning, permitting, and construction take many years. New similar nuclear plants are extremely rare in America. Most of the US nuclear fleet is old and was built before 1990.
The Vogtle units are two of only three nuclear plants built after 2000. Since then, the industry has retired over 30 similar plants. According to Jacopo Buongiorno, Professor of Nuclear Science and Engineering and Director of the Center for Advanced Nuclear Energy Systems at MIT, cost overruns and construction delays played a major role in shifting away from nuclear energy towards other sources.
The new nuclear energy project
The new project is set to be the biggest innovation in American nuclear energy. It is the program for deploying Small Modular Reactors (SMRs) across the US. From a technological standpoint, they are also known in Poland.
The American novelty lies in the national program and government support, both for efficient permitting and for covering the entire United States with their network. Currently, some of these types of nuclear plants are already in the planning and implementation phase.
In Oak Ridge, Tennessee, two new SMRs (Kairos Power Hermes 1 and 2) are operating. They are located in a demonstration facility that will eventually be connected to the grid. The military is also building several small reactors. The Air Force plans to build one at Eielson Air Force Base in Alaska next year. The Army’s Project Janus plans to build many small modular reactors (SMRs) at US Army bases. From a commercial standpoint, NuScale Power (ticker: SMR) and the Tennessee Valley Authority plan to build an SMR at their Clinch River site. Holtec International plans to build two 300 MW SMRs at its Palisades site in Michigan. They plan to start them up by 2031. Discussions are ongoing about using SMRs to power data centers. X-Energy (symbol: XE), Energy Northwest, and Amazon (symbol: AMZN) plan to build a facility in Washington State with a capacity of up to 960 MW.
The uranium problem
There is no shortage of uranium in the world. Nevertheless, only a few countries mine enough to meet current market needs. The United States meets almost all its uranium needs through imports, primarily from Russia.
This is happening despite official declarations banning this trade in the near future. Meanwhile, uranium trading differs fundamentally from all other commodities traded on exchanges. Unlike other goods, such as gold and silver, physical uranium is not traded on open markets.
Buyers are often utilities that purchase enriched uranium for use as nuclear fuel under directly negotiated contracts with sellers. Uranium contracts can last from two to ten years and are set at a fixed, long-term price, or the current uranium price is used as a base.
Mining is generally considered profitable at an extraction price above $50 per pound. Since this price, from 1990 until 2023, hovered around half that threshold, uranium mining in the US and the West was shut down.
An opportunity for miners
American SMRs need between 300 and 500 tons of uranium fuel annually. To produce one ton of uranium fuel, approximately 45 to 50 tons of mined uranium (yellowcake) are needed. Calculations indicate that each new SMR will increase uranium demand by 13,500 to 25,000 tons. The United States currently produces about 680,000 tons of uranium per year. But the situation is not that simple.
They consume about 5 million tons of uranium per year! Thus, each new SMR will widen the already significant deficit. And many SMRs are in the pipeline. Even small reactors need significant amounts of fuel. Therefore, the expert mentioned at the beginning believes that American uranium miners have an excellent investment opportunity for the next decade.
