The West Needs Russia to Power Its Nuclear Comeback...

U.S., Europe add reactors but still heavily dependent on Moscow for crucial ingredients to produce fuel

 WSJ BY JENNIFER HILLER, DANIEL MICHAELS, AND KIM MACKRAEL, MAY 10, 2023

Nuclear power in the West is having a long-awaited revival, with new reactors opening in the U.S. and Europe and fresh momentum toward building more soon.

A gaping hole in the plan: The West doesn’t have enough nuclear fuel—and lacks the capacity to swiftly ramp up production. Even more vexing, the biggest source of critical ingredients is Russia and its state monopoly, Rosatom, which is implicated in supporting the war in Ukraine.

Nuclear power supplies nearly 20% of U.S. electricity, and roughly 25% of European electricity, but in recent decades has struggled to gain traction in most of the West as a green alternative to fossil fuels, for reasons ranging from cost to waste disposal and an erosion of expertise in building reactors.

Pockets of stiff resistance remain: Germany closed its last reactors in April, in a phaseout that began more than a decade ago.

But there are signs of a shift back in nuclear power’s direction, as governments are drawn to its carbon-free electricity as a tool for fighting climate change and lessening dependence on Russian oil and gas.

In the U.S., after years of delays and billions in cost overruns, a nuclear reactor in Georgia in March began splitting atoms for the first time, a crucial step toward reaching commercial operation. Another reactor at the facility, owned by a unit of Atlanta-based Southern, is scheduled to be operational next year. 

Finland last month started regular electricity output at Europe’s largest nuclear reactor, the continent’s first to open in 16 years, which will eventually produce one-third of the country’s electricity. 

Poland in November chose the U.S. company Westinghouse Electric to build its first nuclear-power plant, which will include three reactors and cost about $20 billion.

A recent Gallup poll found that Americans are more supportive of the technology than at any point in the past decade.

Westinghouse, a storied pioneer of electric power, has struggled in the nuclear sector and repeatedly changed hands amid market swings and tighter industry regulation after the reactor accidents at Three Mile Island, Chernobyl and Fukushima.

A group including private-equity firm Brookfield Asset Management bought Westinghouse for almost $8 billion in October, in a move billed as a bet on nuclear power’s resurgence.

Westinghouse said this month that it next plans to launch a line of smaller reactors that could cost as little as $1 billion each.

Westinghouse Chief Executive Patrick Fragman said there is a growing public acceptance of nuclear power and that the company has corrected previous mistakes. “We are in a radically different place and we have taken a lot of the lessons of the past,” he said in an interview.

Despite the industry’s progress, the dependence on Russian enriched uranium for nuclear fuel has proven intractable. 

Nuclear fuel is one of the few Russian energy sources not banned by the West as a result of the war in Ukraine. The reason is rooted in a program from the early 1990s, soon after the Cold War ended, aimed at shrinking the threat of Soviet nuclear warheads falling into the wrong hands.

Under the 1993 deal, the brainchild of a Massachusetts Institute of Technology researcher named Thomas Neff and dubbed Megatons to Megawatts, the U.S. bought 500 metric tons of highly enriched uranium, enough for 20,000 warheads, and had it converted into reactor fuel. 

Arms-control advocates hailed it as a win-win: Moscow got urgently needed cash, Washington reduced its proliferation headache and U.S. utilities got inexpensive fuel. It remains one of the world’s most successful nuclear-disarmament programs.

The deal “did what was promised,” Dr. Neff said in an interview. “We have many fewer nuclear weapons and stuff to make them out of than we did.”

The problem, critics said, was that the deal delivered Russian nuclear fuel so cheaply that rival suppliers struggled to compete. Before long, U.S. and European companies were scaling back and Russia was the world’s biggest supplier of enriched uranium, with nearly half of global capacity.

Before the deal ended in 2013, Russian suppliers, now organized as Rosatom, signed a new contract with the U.S. private sector to provide commercial fuel beyond the government-to-government program. Rosatom still supplies as much as one-fourth of U.S. nuclear fuel.

U.S. companies collectively sent almost $1 billion last year to Rosatom, according to a recent analysis from Darya Dolzikova at the Royal United Services Institute in London.

“That’s money that’s going right into the defense complex in Russia,” said Scott Melbye, executive vice president of uranium miner Uranium Energy and president of the Uranium Producers of America, an industry group. “We’re funding both sides of the war.”

Rosatom was formed by Russian President Vladimir Putin in 2007 from various parts of the country’s nuclear-power industry and is closely controlled by the Kremlin. Its top managers have been deeply involved in running Ukraine’s Zaporizhzhia nuclear-power plant, Europe’s largest, which Russia seized last year and has used as a base for attacks on territory controlled by Kyiv.

Pressure is growing to expand Western uranium-enrichment capacity, not only because a big part of the U.S. economy relies on Russian fuel. A proposed new generation of reactors, which proponents and investors including Microsoft founder Bill Gates are touting as less risky and more environmentally friendly than current reactor designs, requires a special type of fuel that is the nuclear equivalent of high-octane gasoline.

The only source of that fuel today is Rosatom.

“We need fuel to turn our reactor on,” said Jeff Navin, director of external affairs at TerraPower, the Gates-backed company that plans to build its first reactor in Wyoming. He said the U.S. is paying the price for its yearslong unwillingness to build a domestic supply chain for nuclear fuel. “Our options are either build it out now, or hope for some magical solution emerging in another country,” Mr. Navin said.

The multinational Urenco owns one of only two uranium-processing facilities in the U.S., in Eunice, N.M., just across the Texas border. The company says it is spending roughly $200 million on new capacity and can invest much more if Russian uranium is sanctioned.

The catch: It wants government guarantees on quantities allowed in the market.

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Urenco’s fear, said Kirk Schnoebelen, head of U.S. sales, is that in several years low-price Russian enriched uranium might swamp world markets, tanking prices.

Mr. Schnoebelen said the concern is born of history. Urenco in the 1990s began planning what was to be the first new uranium-enrichment plant in the U.S. in decades.

But because of the Megatons deal, “the business case for that project was utterly destroyed,” he said. Today that history “absolutely” informs the U.S. nuclear industry’s thinking and makes corporate boards reluctant to invest the necessary billions, he added.

A bipartisan group in Congress is now pushing legislation to ban U.S. use of Russian uranium, build a national uranium reserve, boost domestic ability to refine uranium into fuel and add uranium to the country’s critical minerals list.

“When the Ukraine war is over, it is not going to be over,” said Idaho Sen. Jim Risch, a Republican and co-author of the legislation. “It’s going to take generations before there’s any trust again in the Russians.” 

Westinghouse’s Mr. Fragman said the legislation is long overdue.

“Governments need to keep an eye on what is going on in the nuclear industry,” he said. “At some point when a certain number of Western facilities shut down there should have been an alarm bell.”