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Valued Beginnings 

Nuclear fission has safely and reliably provided power in the U.S. since the opening of the first commercial plant at Shippingport, PA in 1957. Nuclear currently provides ~19% of the electricity utilized in the U.S., second only to natural gas. After bringing an impressive 50 new plants online during the 1970s, U.S. nuclear capacity growth stagnated in the 1990s due to skyrocketing development and regulatory costs as it was also met with public opposition following the Three Mile Island and Chernobyl accidents. The impacts have been profound, with only eight new plants coming online since 1990.  

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Renewed Interest

However, broadening needs for electricity and industrial heat are providing strong tailwinds for the U.S.’s nuclear fission industry to flourish again, with several new nuclear project announcements made in 2024. Venture investors appear increasingly bullish on advancing technology to satisfy signaled market needs and have invested over $5 billion into nuclear fission related technology startups since 2020. Advanced fission reactor companies pursuing small modular (~100-300 MWe) and micro (<100 MWe) reactor designs have garnered the lion’s share of the funding and are set to demonstrate their potential to abate the concerns of past efforts while reducing initial construction cost, improving reliability, and expanding market applications through repeatable and cost-effective manufacturing of smaller sized systems.

Despite its promise of clean, baseload power, commercial nuclear continues to face cost, regulatory, and supply chain challenges. As the nuclear industry aspires to capitalize on today’s opportunities, parallels from the commercial space industry may present valuable lessons for founders and investors. Both nuclear and space industries have a shared history of high barriers to entry, government-driven development, and significant capital intensity. Early advancements in both sectors were heavily influenced by government programs, such as the Manhattan Project and NASA's Apollo missions. However, while the space industry has experienced rapid growth in recent decades, the U.S. nuclear industry has struggled to maintain its momentum. However distinct parallels can be drawn with prominent startups that catalyzed the space industry such as: Skybox’s expansion of end customer applications, Spaceflight’s push to reduce timeline uncertainties, and SpaceX’s vertical integration of production and reimagining of product form factor, all appear to be offering lessons for today’s nuclear sector innovators and investors.

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Expanding Applications: The expansion of satellite data applications democratized access to high-quality imagery, opening new markets in various sectors such as agriculture, urban planning, and disaster response. The clearest potential parallel in today’s nuclear industry involves form factor and business model innovation to capitalize on new customer types such as data center operators, industrial/manufacturing companies, islanded communities, and even some new application targeting early adaptors in the defense, space, and maritime. The advanced nuclear sector’s ability to capture market through new customer segment expansion hinges on its ability to deliver on promised modularity, sighting, and safety metrics without compromising on costs. Reactor developers can further tailor offerings to new customers by offering long-term power purchase agreements (PPAs), direct reactor sales, or other creative structures.

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Improving Predictability: In the same way that a lack of timeline and cost predictability for launch services hampered the commercial satellite industry, pervasive uncertainty in regulatory timelines and cost overruns has limited the development of new nuclear power plants. In the U.S., obtaining a Combined Operating License (COL) from the Nuclear Regulatory Commission takes approximately four years, while significant delays regularly occur during construction due to site-specific design modifications requiring additional regulatory approval. For example, Vogtle Units 3 and 4 received their COL in 2008 but did not reach commercial operation until 2024 due to post-Fukushima safety requirements and design changes, highlighting how bespoke approvals and evolving compliance standards can extend project timelines. A potential remedy to licensing and construction timeline predictability challenges would be a company offering innovation in managing and financing projects with particular focus on turn-key licensing, environmental reviews, and compliance requirements services to reactor vendors or future owner-operators to help drive clarity in critical regulatory approval and construction periods.

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Integrated Manufacturing and Reimaging Form Factor: Companies like SpaceX and Rocket Lab have demonstrated the power of optimizing supply chains through vertical integration of manufacturing yielding more efficient production for legacy supply chains with misplaced incentive structures, thus significantly improving manufacturing predictability and reducing launch costs. This model can be applied to the nuclear industry by streamlining procurement and vertically integrating key manufacturing processes to improve timeline predictability. New nuclear market entrants stand to benefit through focus on vertical integration of supply chain, where limited supplier competition and reliance on custom components have historically driven up costs. For non-vertically integrated parts, advanced reactor producers could streamline procurement by standardizing components, enabling bulk purchasing and reducing lead times for critical inputs like fuel.  

What else is needed for the U.S. commercial nuclear industry to flourish? 

Today, there is potential for commercial nuclear to leverage its private investing momentum and mirror the early 2000’s commercial space sector. However, for the U.S. nuclear industry to seize the moment and benefit from this influx of private investment, the nation must also address notable gaps, deficiencies, and lack of commercial competition over strategic points within the nuclear fuel supply chain.
 

Not only does the U.S. need more upstream fuel supply chain activity to enable the existing reactors to operate independent of foreign influence but also, the existing fuel supply chain cannot support the growth of the advance reactor designs slated for demonstration the later part of this decade. There is nearly-zero U.S. production of high-assay low-enriched uranium (HALEU) fuel, which many of these newly funded smaller sized, advanced reactor designs depend upon. Russia’s dominant global position as the leading supplier of nuclear fuel for the U.S.’s current commercial fleet of nuclear reactors and the only provider/exporter of HALEU poses significant economic and geopolitical risk to American innovators and their end customers. The Department of Energy has recognized this challenge and made building the HALEU supply chain a top priority and the Inflation Reduction Act invested over $700 million to support infrastructure, but the private sector must also recognize and prioritize this challenge for the next wave of safer, more reliable, and more capital efficient reactor designs to be able to operate here in the U.S. and be brokered to the U.S.’s allied nations. 

Concluding Remark 

The innovation pipeline is primed with high-impact ideas that could remake how nuclear power is applied, produced, deployed, and sold. Just as commercial space was revitalized through venture-backed startups, IQT believes the startup ecosystem will play a critical role reinvigorating robust growth and renewed competitiveness in the U.S. energy industry.  Now is the time – the U.S.’s public and private investing ecosystems must turn its attention to the commercial nuclear fuel supply chain to maintain the U.S.’s global leadership role in the global nuclear industry it created.