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DOE prepares to put a nearly completed uranium contract up for bid

23 February 2022

To placate lawmakers, the agency is seeking new proposals for work on an enrichment plant. But the winner seems preordained.

The US Department of Energy appears to be going through the motions of holding a competitive solicitation to complete a uranium enrichment demonstration project. The incumbent, Centrus Energy, is all but certain to win, and a key House member says he isn’t pleased about it.

Representative Bill Foster (D-IL), who chairs the investigations and oversight subcommittee of the House Committee on Science, Space, and Technology, says the department should allow other vendors—including Urenco, a European consortium that operates the US’s sole commercial uranium enrichment facility—to bid to supply the government with a small quantity of high-assay low-enriched uranium (HALEU). With its upcoming solicitation to produce a minimum of 900 kg of HALEU annually, DOE’s Office of Nuclear Energy (NE) says it is doing that. However, it will limit the competition to bidders who will produce the fuel at the Centrus 16-centrifuge HALEU plant in Ohio that it commissioned in 2019 in a no-bid $115 million contract.

Centrus is also the only company currently licensed by the US Nuclear Regulatory Commission to produce HALEU, which is enriched up to 19.75% in 235U. That’s just below the 20% threshold defined as highly enriched uranium (HEU) and considered a proliferation threat. A Centrus spokesperson says the company is “pleased that the department is moving ahead with a competitive process for the next phase of the program.”

Asked how likely it is that a bidder other than Centrus could win the contract, a DOE spokesperson declined to answer directly, saying the details of the solicitation won’t be released until the request for proposals is issued. That’s planned for the end of February.

NE’s structuring of the solicitation is “absurd,” says Princeton physicist Frank von Hippel, who closely watches DOE’s nuclear programs.

A Urenco spokesperson declined to say whether the company would bid on the contract if its facility in Eunice, New Mexico, were eligible to participate. But the company has expressed interest since 2019 in producing HALEU, which is needed to fuel advanced reactors that are being developed for civilian, military, and space applications. “Why would NE rule out that option? Why would any other company want to use the Centrus 16-centrifuge setup in the middle of nowhere?” asks von Hippel.

Controversial from the start

The 2019 agreement between NE and Centrus, which required the company to bear 20% of the demonstration cost, had originally called for delivery in 2021 of up to 600 kg of HALEU from the demonstration cascade located in Piketon, Ohio, the site of a decommissioned gaseous diffusion enrichment plant. After Foster and several other House members objected to multiple NE sole-source awards, the department halted the project last fall to put the remainder of the work, including HALEU production, out for bid.

Rep. Bill Foster (D-IL).
Rep. Bill Foster (D-IL). Credit: Official Portrait, US House of Representatives

In a 7 February pre-solicitation notice, NE indicated its intention to award the contract for operation of the demonstration plant, which it says is 84% complete. That would seem to limit the competition to Centrus, which claims to have spent $3 billion of its own money developing its proprietary 12-meter-tall AC100M centrifuges over several decades. DOE has contributed hundreds of millions more on developing the technology.

“It will be interesting if [DOE] comes back to Congress to revisit its process in a way that will exclude other commercial vendors who would otherwise be qualified,” Foster says. An advocate of advanced reactors, Foster says developers would best be served by having multiple HALEU suppliers. “If I was a developer of an advanced reactor that depends on HALEU and was worried about a future large-scale capability for commercial production, I would feel at least as much comfort in seeing that an existing large-scale enrichment company like Urenco had a standard product available in the US at those higher enrichment levels,” he says.

This is not the first time that lawmakers have questioned the 2019 sole-source award to Centrus, whose CEO, Daniel Poneman, was DOE deputy secretary in 2009–14. A bipartisan group of four other science committee members in 2019 raised concerns with DOE’s decision to bypass competitive bids for the demonstration, expressed skepticism over the need for HALEU, and questioned why DOE’s civilian nuclear program was tapped to pay for a program that ultimately will be of far greater benefit to defense applications. The science committee has jurisdiction for oversight of NE but not DOE’s defense programs. Senator John Barrasso (R-WY) also voiced concerns with the awarding of the Centrus contract in 2019, calling it a “bailout” of an unsuccessful business.

Anticipating HALEU demand

HALEU will be necessary to fuel some types of advanced reactors. Those include the sodium-cooled fast reactor that TerraPower and GE Hitachi Nuclear Energy plan to build in Wyoming with $2.5 billion in DOE cost-sharing funds appropriated by the Bipartisan Infrastructure Act. (See Physics Today, November 2021, page 25.) X-energy’s project to build four HALEU-fueled high-temperature gas-cooled reactors also will receive $2.5 billion through the act. Both are scheduled for completion by 2028.

In a December press release, NE said HALEU demand will total more than 40 tons by 2030. Monica Regalbuto, leader of the integrated fuel cycle initiative at Idaho National Laboratory, detailed the potential sources of HALEU demand to a National Academies of Sciences, Engineering, and Medicine committee in September. She said that HALEU demand for medical isotope production, the conversion of research reactors from HEU fuel, the Pentagon’s microreactor development efforts, and DOE’s advanced reactor demonstration program will total 8–10 tons each year for the next decade. Further demand could come from additional commercial advanced reactors that may be built during that period, she added. In 2020 the Nuclear Energy Institute, the industry trade association, forecast HALEU demand from utilities at 137 tons in 2030 and 501 tons in 2035.

X-energy reactor design.
Future advanced reactors such as X-energy’s XE-100, illustrated here, will require high-assay low-enriched uranium. Credit: X-energy

But today, HALEU isn’t produced anywhere outside Russia. DOE can meet demand for a few years by blending down its surplus stocks of HEU enriched during the Cold War. Andrew Griffith, DOE deputy assistant secretary for nuclear fuel cycle and supply chain, told the National Academies committee that the agency has located material that can readily be diluted into 4 tons of HALEU. Longer term, DOE could recover 32 tons of HALEU from spent fuel located at the Savannah River Site and at the Idaho National Laboratory, according to a 2020 presentation by a Savannah River Site official.

Urenco, owned by a consortium of the UK and Dutch governments along with two German utilities, has explored the possibility of producing HALEU. In a January 2020 presentation to the National Association of Regulatory Utility Commissioners, Kirk Schnoebelen, Urenco’s head of sales, estimated the capital cost for a HALEU production facility at its New Mexico plant at $200 million to $300 million and said the project could be completed in six to seven years.

Foster and other science committee members also complained that NE, whose total fiscal year 2021 budget was $1.5 billion, appears to be subsidizing the much larger long-term defense requirements of DOE’s National Nuclear Security Administration, whose budget last year was $19.7 billion. NNSA was expected in 2019 to announce plans to build a multibillion-dollar enrichment plant for two of its needs: low-enriched uranium (LEU) to breed tritium and HEU to fuel the nation’s nuclear submarine fleet. The agency has said it has enough LEU to last until the late 2030s and sufficient HEU until 2064. NNSA still hasn’t announced its enrichment plans.

One choice for domestic-origin enrichment

Though LEU is plentiful in the international markets, current US policy mandates that uranium used for defense purposes be enriched using domestic-origin enrichment technology. That would exclude Urenco, whose centrifuges were developed in Europe. The policy also makes it highly likely that Centrus, the only company with domestic-origin technology, would get the nod should NNSA decide to build its own enrichment plant.

“There may be very good Department of Defense reasons to have a US enrichment capacity based on US-developed technology, but that’s for the Department of Defense,” says Foster. “I don’t want to weigh down commercial uses of HALEU with the necessity of subsidizing essentially future weapons or defense applications.”

No domestic origin requirements exist for civilian uranium uses. Still, DOE has argued that since some HALEU will be used to fuel small reactors that the military has proposed to provide an independent source of power to its bases and for portable battlefield reactors, the domestic enrichment provisions could still apply. That would be inconsistent with the fact that US military bases draw their power from a commercial electricity grid, about 20% of which is supplied by nuclear reactors. Two-thirds of US commercial reactor fuel is imported, much of it by Centrus from Russia.

Considering the current lack of clarity, Foster says there would be value in NE allowing Urenco to bid to produce HALEU at its own facility, even if it didn’t win. “There would be a clear statement that they have the legal capacity to provide HALEU for future commercial uses,” Foster says. “That may be very reassuring to those who are developing advanced reactors.”

Since the 2019 award, NE has increased the value of the Centrus contract to reflect COVID-related impacts and additional costs incurred in meeting Nuclear Regulatory Commission security requirements for HALEU, which are more stringent than for lower levels of enrichment. In recent Securities and Exchange Commission (SEC) filings, Centrus reported about $10 million in additional expenses. NE said the additional funding amount is still under review.

DOE has requested $33 million for HALEU activities in FY 2022, part of which is to fund ongoing operation of the demonstration plant, Centrus said in its SEC filing. Congress has yet to complete action on FY 2022 appropriations, however, and the government continues to operate at FY 2021 funding levels. NE has stated that it would not fund an expansion of the plant.

The House-passed Build Back Better bill included $500 million for a HALEU program. But passage of the signature Biden initiative has been blocked by the opposition of all 50 Republican senators and two Democrats.

DOE has supported Centrus and its predecessor, the bankrupted US Enrichment Corp, on multiple occasions since USEC’s creation in 1998 to privatize two DOE-owned gaseous diffusion enrichment plants. The last plant closed in 2013. Beginning in 2008, the company unsuccessfully sought $2 billion in loan guarantees from DOE to build a commercial-scale centrifuge plant. DOE did provide $270 million for a cost-shared demonstration of a 120-centrifuge pilot plant located in Piketon. Those centrifuges were scrapped.

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