Nuclear in the energy transition

Global uranium supply-demand?

Uranium yellow-cake (U3-8) supply by project type from 2010 to 2023 and forward estimates to 2050 based on current project and asset lifetimes.

Our global uranium supply-demand model sees the market 5% under-supplied through 2030, including 7% market deficits at peak in 2025, as demand ramps from 165M lbs pa to 230M lbs pa in 2030. This is even after generous risking and no room for disruptions. What implications for broader power markets, decarbonization ambitions, and uranium prices?

The world’s nuclear fleet generated 2,700 TWH of electricity in 2023, consuming 165 M lbs of mined uranium (on a U3O8 yellow-cake basis). We see these numbers rising to 3,800 TWH pa of electricity and 230 M lbs pa of uranium by 2030, then to 7,000 TWH pa and 420 M lbs by 2050 as part of our Roadmap to Net Zero.

But can uranium production keep up? Global uranium production was only 150 M lbs in 2023, as nuclear utilities were over-contracted in 2012-2017, and have been drawing down inventories for the past five years. Of course, inventory draws cannot continue forever.

This uranium supply-demand model sees the market 5% under-supplied in aggregate through 2030, with the under-supply peaking at 7% of the market in 2025.

This is concerning because as things stand there will not be enough uranium mined and upgraded to ramp nuclear generation. In the short-term, this could raise power prices and demand could surprise to the upside for other round-the-clock generation sources, such as natural gas.

Uranium prices must sustainedly rise above the incentive price for developing more uranium mines. And perhaps they may sustain far above this incentive price, amidst persistent market shortages, as regional reserve margins require for nuclear plants to run, and each $10/lb on the uranium price only adds 0.05 c/kWh to the marginal cost at a nuclear power plant.

These uranium supply forecasts are based on evaluating around 100 production assets and developments, generating an outlook for each one.

Assumptions include a typical decline rate of 3% pa, 80% risking on new assets re-opening and developments that are underway, 50% risking on FEED-stage projects and 30% risking on planning-stage projects, on average throughout the model.

Uranium production by country is also disaggregated in the data-file. 40% of global output is from Kazakhstan today. Canada, which is 20% of today’s supply, doubles its output in the next decade. Growth is also seen in Namibia and Australia, which are about 10% of today’s output. The US grows most in percentage terms, rising from almost nil to almost 10 M lbs pa in the next decade.

Uranium yellow-cake (U3-8) supply by country from 2010 to 2023 and forward estimates to 2050 based on current project and asset lifetimes.

Uranium production by company is available in our screen of uranium producers, which also has more commentary on the underlying companies developing various projects.

Notes on each project in our global uranium supply-demand model can be viewed in the notes tab, and risking factors can be varied in the assets tab of the data-file.

Oklo: fast reactor technology?

Oklo is a next-generation nuclear company, based in California, recently going public via SPAC at a $850M valuation, backed by Sam Altman, of Y-Combinator and OpenAI fame. Oklo’s fast reactor technology absorbs high-energy neutrons in liquid metal and targets ultimate costs of $4,000/kW and 4c/kWh. What details can we infer from assessing Oklo’s patents, and can we de-risk the technology in our roadmap to net zero?

Oklo was founded in 2013, is headquartered in California, and has c50 employees. Sam Altman, of Y-Combinator and OpenAI fame, has been the Chairman of Oklo since 2015 and is CEO of the acquisition company, AltC, which has taken Oklo public via SPAC, with a listing on NYSE, while also raising $500M, at a valuation of $850M.

The company is named in homage to the Oklo mine in Gabon, where rock samples from 1972 uniquely seemed to show small quantities of U-235 naturally fissioning in the Earth’s subsurface, probably because of groundwater acting as a moderator.

Oklo plans to commercialize a liquid metal fast reactor, called the Aurora powerhouse, with 15MWe of power, using a mixture of recycled nuclear fuel and fresh fuel. It is also developing a 50MWe solution.

Illustration of the structural elements in Oklo's fast reactor.

In 2023/24, its published targets envisaged starting up a plant in the 2026/27 timeframe, which would be one of the soonest of the next-gen nuclear concepts we have screened.

Next-generation nuclear companies: future fission and fusion?

The 15MWe plant is ultimately envisioned to cost “less than $60M” (versus $2-5bn for 300-1,000MW alternatives). This equates to less than $4,000/kWe. Including investment tax credits, Oklo materials thus see LCOEs for carbon-free baseload potentially as low as 4c/kWh. Numbers can be stress-tested in our nuclear cost model.

In April-2024, Diamondback Energy also agreed a 20-year PPA to procure 50MW of emission-free electricity for its operations in the Permian Basin.

Hence can we de-risk Oklo’s fast reactor technology, based on its patents? What details can we infer from the patents? (chart above). How does the patent library look on our usual patent assessment framework? And what challenges are we considering in our risking of this technology to meet new loads such as data-centers and as part of our roadmap to net zero?

Oklo’s design is a liquid metal fast reactor, a small, prefabricated, non-pressurized liquid-metal-cooled fast reactor, moving beyond the ‘light water reactors’ used for most nuclear plants historically. Specifically, this means it harnesses energy from fast neutrons, each with >1MeV of energy, as generated from fission, without using water or graphite moderators to slow them down to the 0.025eV energy level that promotes fission.

Instead, fast neutrons are reflected back within the reactor core, absorbed directly as heat in liquid metal, and can also breed more fissile isotopes (as opposed to light water reactors that only tend to use c5% of their nuclear fuel). Specific details can be guessed based on Oklo’s patents.

Reaching criticality: nuclear re-accelerates?

Outlook for nuclear in the energy transition

400 GW of nuclear reactors produce 2,800TWH of zero carbon electricity globally each year. But the numbers have been stagnant for two decades. This is now changing. This 14-page note explains why. We expect a >3% CAGR through 2030, and hope for a 2.5x ramp through 2050. A ‘nuclear renaissance’ helps the energy transition.

Nuclear capacity: forecasts, construction times, operating lives?

How much nuclear capacity would need to be constructed in our roadmap to net zero? This breakdown of global nuclear capacity forecasts that 30 GW of new reactors must be brought online each year through 2050, if the nuclear industry was to ramp up to 7,000 TWH of generation by 2050, which would be 6% of total global energy.

Our outlook for nuclear energy is evolving. Adding 30GW pa of new nuclear capacity per year would be a massive escalation from, as the world has only added around 6 GW per year of new capacity in the past decade.

However, there is precedent, as the world installed 25-30 GW pa of new nuclear reactors at peak, during the mid-1980s, and after a wave of project-sanctioning that followed major energy crises in 1973-74 and 1979-80.

The total base of active, installed nuclear capacity is around 400 GW today, for perspective. Leading countries include the US, with c100 GW of capacity, France with 60GW, China with 50GW and Russia with 30GW. Japan’s nuclear capacity is presently around 45GW, but a large portion of the installed base remains offline post-Fukushima.

Moreover, the average nuclear plant in the world today has been running for 36-years, which means that 10GW of reactor capacity could shut down each year through 2050.

Underlying the analysis is a database of 700 nuclear reactors, including c440 in operation, c200 that have been shut down or decommissioned and around 60 that are in construction. A helpful source in compiling our forecasts is publicly available data from the IAEA, which we have aggregated and cleaned.

The data also show operating lives of nuclear plants, and construction times of nuclear plants, which average 7.5 years from breaking ground through to first power; across different reactor designs and across different countries.

Finally, this breakdown of global nuclear capacity data-file allows you to filter upon individual countries, such as the US, Germany, France of China. Numbers have been updated in October-2024.

X Energy: nuclear fuel breakthrough?

X-Energy Technology Review. X-Energy is a private, next-generation nuclear company, founded in 2009, headquartered in Maryland, USA with c300-employees at the time of writing. Its reactor design is a high-temperature, gas-cooled reactor (HTGR), commercializing 80MWe of electricity from c200MWth of heat.

Progress and economics. A $2.4bn advanced demonstration project is being progressed in Washington State, for start-up in 2027, half of which will be funded by the DOE (the other main recipient is TerraPower). Ultimately, levelized costs of 6c/kWh are targeted (these are very competitive levelized costs).

X-Energy’s key innovation is using an inherently safe TRISO fuel. TRISO fuel comprises ‘TRI-structural ISO-tropic fuel” particles. Each of these particles is around 0.85mm wide, and contains a 15.5% enriched uranium core (HALEU), surrounded by a porous layer of graphite, then three further containment layers of dense carbon and ceramic, to make the particle “the most robust nuclear fuel on Earth”. It cannot melt or melt down. This enables a simplified reactor design, using 220,000 x 60mm ‘fuel pebbles’, each containing around 19,000 TRISO fuel particles.

What stands out about X Energy’s patents is that they are substantively all focused on manufacturing its TRISO fuel, and they score very highly on our usual patent framework. Specifically, our work reviews a concentrated library of patents focused on manufacturing TRISO particles from gels of enriched uranium oxides, which are then coated with protective layers, using chemical vapor deposition. Many of the patents specify precise reagents and reaction conditions, backed up with experimental data and detailed design drawings. Hence our X-Energy technology review suggests a moat around the core IP.

TerraPower: nuclear breakthrough?

TerraPower was founded in Washington State in 2008, employs around 600 people and has received early and consistent backing from Bill Gates. Our TerraPower technology review is based on its patents.

TerraPower describes itself as a nuclear/energy technology company, whose centrepiece technology is a traveling wave reactor for next-generation nuclear energy. 300-1,000MWe reactors were designed. But a 2015 MoU to develop the TWR technology further, with China’s National Nuclear Corporation, was abandoned in 2019 due to technology transfer limitations from the Trump administration. TerraPower has more recently seemed to de-prioritize the traveling wave reactor, instead developing a 345MWe, sodium fast reactor called Natrium, under a partnership with GE-Hitachi.

Our usual patent search returned 143 distinct patents for TerraPower, which is more than other next-gen nuclear, or other pre-revenue companies we have reviewed.

We reviewed TerraPower’s 20 most recent patent filings, to see where it is currently focused. This shows a large library of process enhancements around different energy technologies, mostly fission technologies, and most recently, sodium fast reactors fueled by the circulating flow of radioactive salts. However, given the broad range of patents, it was difficult for us to identify what is the “front-runner” closest to commercialization, and which patents de-risk it or create a moat around it. Full details are in the data-file.

To read more about our TerraPower technology review, please see our article here.

Terrestrial Energy: small modular reactor breakthrough?

Our Terrestrial Energy technology review focuses on a next-generation nuclear fission company, founded in 2013, based in Ontario, Canada, has c100 employees and is aiming to build a small modular reactor, more specifically, an Integral Molten Salt Reactor.

Game-changer? A plant with 2 x 442MWth and 2 x 195MWe reactors might use 7 hectares of land, get constructed within 4-years, and for less than $1bn per reactor (long-term target is $2,600/kWe), yielding levelized costs of 5c/kWh (company target, we get to 5-7c/kWh for a 5-10% equity IRR in our own models), a CO2 intensity below 0.005 kg/kWh and multiple ways to back-up renewables.

Our patent review shows one of the strongest patent libraries to cross our screens from a pre-revenue company. 80 patents, filed in 25 geographies, lock up 8 core innovations, and give a clear picture for how the reactor achieves high efficiency, high safety and low complexity.

To read more about our Terrestrial Energy technology review. please see our article here.

General Fusion: magnetized fusion breakthrough?

General Fusion technology review. General Fusion is developing a magnetized target fusion reactor, to fuse heavy isotopes of hydrogen (deuterium and tritium). It confines 100MºC plasma within a vortex of liquid lithium/lead, then compresses the plasma via hundreds of high-pressure pistons (effectively a modern-day update of the Linus concept).

It is currently working towards building a 70%-scale demonstration plant by 2025 in Oxfordshire; and ultimately hopes to build a $4bn order book by 2027-30, commercializing a 100-200MWe fusion reactor with 5-6.5c/kWh levelized costs of electricity.

Our patent review allows us to de-risk the idea that General Fusion has made genuine, specific and practical innovations towards development of a magnetized target fusion reactor.

The downside of such a candid patent library is that it also highlights the complexity of its ambitions. There are four focus areas which we would highlight in our General Fusion Technology Review.

To read more about General Fusion innovations, please see our see our article here. Fusion remains a theme that could be a game-changer for energy transition. Other companies with good innovations have also crossed our screen. A summary of all this research can be found here.

Japan: nuclear restart tracker?

Possible upside by 2030 in Japan's nuclear electricity generation.

This data-file looks through 17 major nuclear plants in Japan with 45GW of operable capacity, covering the key parameters and restart news on each facility. Japan’s nuclear restart had ramped output back to 78TWH pa by 2023, and may rise by a further 100 TWH by 2030, to meet targets for 20% nuclear in the country’s generation mix.

In 2010, before the Fukushima crisis, Japan produced 292 TWH of nuclear electricity, which would have required about 40MTpa of LNG imports if it had all been generated by gas power instead.

With all its nuclear plants shut down in 2011-12, LNG imports jumped by around 20MTpa, while the remaining shortfall was covered by ramping oil-fired power back upwards by c600kbpd.

Japan’s nuclear restart is evaluated in this data-file, tracking Japanese nuclear output by facility. Sendai was the first facility to restart, in 2015, after passing “the world’s toughest safety screening” and adding anti-terrorism safeguards.

Japan’s nuclear restart also includes output from Takahama, Ikata, Mihama, Genkai, Ōi and Sendai, by 2024. Output by facility is shown in the ‘RestartSchedule’ tab. Restarting many facilities requires safety upgrades and lifetime extensions.

Schedule for Japanese reactor restarts up to 2030.

Every reactor restarted so far has been a PWR. BWRs (like Daiichi) are more costly to upgrade to new safety standards (work on safety measures for Onagawa BWR started in 2013 and has cost $4.5bn), or there is more public opposition to restarting BWRs (local government must give its approval to restart a reactor).

Japan’s GX Decarbonisation Power Supply Bill came into force in 2024, and aims to ramp the share of nuclear electricity from 5% to over 20% by 2030. This is captured in our estimates, which see partial restarts at Kashiwazaki-Kariwa (the largest nuclear plant in the world), Higashidōri, Onigawa, Shika, Shimane, Tōkai and Tomari.

As of July-2024, we have also included a simple model of Japan’s electricity mix, from 1985 to 2023, plus our forecasts through 2030. The best option for decarbonization would be to ramp nuclear, solar, hydro and wind, hold LNG imports flat, and then reduce coal use by 60%, which can halve total CO2 intensity of Japan’s grid by 2030. Numbers can be stress-tested in the data-file.

Japan's electricity mix from 1985 to 2030. We expect the nuclear ramp-up from 2024 to primarily displace coal generation.

Total global nuclear generation is around 2,800 TWH pa, so adding 100TWH of generation in Japan is c3.5% upside, and adds 6M lbs of demand to uranium markets. The impact is milder on LNG markets, especially if the nuclear ramp predominantly displaces coal. For further details, please see our outlook for nuclear in the energy transition.

Commonwealth Fusion: nuclear fusion breakthrough?

Commonwealth Fusion Systems spun out of MIT in 2018. The company is based in Massachusetts, has 165 employees and made headlines in November-2021 as it raised $1.8bn in Series B funding, which we think is the largest capital raise of any private fusion company to-date.

CFS aims to be the “fastest and lowest cost path to commercial fusion energy” by creating a commercial nuclear fusion reactor, the SPARC tokamak, which could be around 98% smaller than ITER. A single test magnet using 267km of its HTS tape sustained 20 Tesla magnetic fields in 2021.

Our patent review found CFS to have a high-quality patent library, of specific, intelligible, practical and commercially-minded innovations to densify the magnets that would confine plasma in a Tokamak. Specific details, and minor hesitations are in the data-file.

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