By Timothy Gardner
WASHINGTON (Reuters) - The U.S. government and a unit of Centrus Energy (NYSE:LEU) Corp have a signed an agreement to start producing fuel expected to be used in next generation nuclear reactors after the process was delayed by the COVID-19 pandemic.
The Department of Energy said late on Thursday that it and Centrus Energy's American Centrifuge Operating, LLC will share the $150 million cost 50-50 to demonstrate production of a fuel called high assay low enriched uranium, or HALEU.
The contract will enable production at the company's plant in Ohio of 20 kilograms of HALEU, enriched up to 19.75% by the end of 2023, the DOE said. Output is expected to continue in 2024 at 900 kilograms a year, depending on congressional appropriations, with additional options to produce more material under the contract in the future, it said.
“This demonstration shows DOE’s commitment to working with industry partners to kickstart HALEU production at commercial scale to create more clean energy jobs and ensure the benefits of nuclear energy are accessible to all Americans," Energy Secretary Jennifer Granholm said in a release.
HALEU is expected to be used in reactors in the works by companies including X-energy and TerraPower, that President Joe Biden's administration sees as a critical in cutting carbon emissions to fight climate change.
Critics have warned that many so-called advanced reactors pose risks because they can produce plutonium, a nuclear explosive that militants could try to obtain to make bombs.
Currently the only company selling commercial shipments of HALEU is TENEX, part of Russia's state-owned energy company Rosatom.
The Biden administration projects that more than 40 tonnes of HALEU will be needed before the decade ends, with additional amounts required each year, to deploy reactors to support its goal of reaching 100% clean electricity by 2035.
The United States has struggled to produce commercial HALEU. Washington awarded a shared-cost contract in 2019 to Centrus to build a demonstration facility which was due to start making HALEU this year. Production got pushed back to 2023, partly because of delays in obtaining storage containers due to supply chain issues during the global pandemic, Centrus has said.