“2 Down, 198 To Go” How Will The US Fuel Expansion Of It’s Nuclear Fleet?
In late May, U.S. Secretary of Energy Jennifer Granholm called for the construction of “hundreds” of new large nuclear reactors by 2050.
Speaking at the recently operational Vogtle 3 and 4 reactors in Georgia, Granholm said;
“To reach our goal of net zero by 2050, we have to at least triple our current nuclear capacity in this country. That means we’ve got to add 200 more gigawatts by 2050. Okay, two down, 198 to go!”[1]
The push for nuclear energy is also evident in the recent decision to re-open the Palisades Nuclear Power Plant in Michigan as well as the infamous Three Mile Island plant in Pennsylvania, whose partial reactor meltdown in 1979 sent the US into an anti-nuclear panic which lasted decades.[2]? What has caused this pivot?
US electricity demand has remained flat for 15 years – until recently. ?Data centers and industrial facilities have become the biggest drivers of new demand for base-load power. ?Investments in U.S. data centers are projected to exceed $150 billion through 2028[3], but intermittent sources of electricity like wind or solar won’t provide the constant base load power required.
According to analysis from Boston Consulting Group — exploding demand for AI could drive data power from 2.5% of total usage currently to 7.5% by 2030 [4]. Grid planners across the U.S. forecast an increase of 38 gigawatts of peak demand by 2028.
To put that in perspective, a peak demand increase of 38 gigawatts translates to 38,000 megawatts.? The Vogtle 3 and 4 reactors once fully operational will produce 4,536 megawatts.? Absent other power sources, the US will need another 8 x Vogtle 3&4 complexes in three and a half years to just keep up!?
While this goal to build out carbon-free, base-load power to support US economic growth is laudable, where will the nuclear fuel come from to power these reactors?
Current US production of uranium does not even come close to meeting demand. According to the US Energy Information Administration, owners and operators of U.S. civilian nuclear power reactors purchased a total of 51.6 million pounds of U3O8 in 2023[5], virtually all it from foreign suppliers. ?In fact,? U.S. uranium mines produced a paltry 50,000 pounds of uranium concentrate in 2023, a significant decrease from the 194,000 pounds produced in 2022.[6]
This is not only a US problem, there is a global shortage of uranium as other countries expand their nuclear fleets as well.? In fact, according to recent estimates, uncovered uranium requirements are measured in billions of pounds.? Put another way, the world is needs approximately 2.1 billion pounds between today and 2040, relative to annual current global production of 128MM lbs.[7]
No one really knows what price level will incentivize 2.1 billion pounds of new uranium production globally, but many speculate that term contracts from utilities will need to be priced at $150 / lb or higher, based on an ever-shifting cost curve. ?If current forces continue to tighten the global demand / supply picture, a sharp price response in the uranium spot and term contract price will eventually occur, even if the exact timing is hard to call.? As such, the US government’s commitment to expand its nuclear fleet makes an even more compelling case for investment in domestic uranium production, and, in uranium itself.??
#uranium #nuclearpower #mining #naturalresources
John Gibson David Franklin Dan Martin Taylor Davison, CMT Taylor Howie Diego Miranda Darrell Bartlett CFA, CPA, CA, CIA Fabiene Evans, CPA, CA
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[1] Remarks as Delivered by Secretary Jennifer M. Granholm on Startup of Vogtle Unit 4 and Growth of U.S. Nuclear Industry
[2] “We’ve found the plant is in pretty good shape,” CEO Joe Dominguez said in an interview. “We think it is technically feasible to restart it.”
[3] Suddenly, US electricity demand is spiking. Can the grid keep up https://www.canarymedia.com/articles/transmission/suddenly-us-electricity-demand-is-spiking-can-the-grid-keep-up#:~:text=Can%20the%20grid%20keep%20up,fast%20enough%2C%20new%20data%20shows.&text=For%20the%20past%20two%20decades,United%20States%20has%20hardly%20increased.
[4] The Era of Flat Power Demand is Over. https://gridstrategiesllc.com/wp-content/uploads/2023/12/National-Load-Growth-Report-2023.pdf
[5] EIA Uranium Marketing Annual Reporthttps://www.eia.gov/uranium/marketing/
[6] EIA Domestic Uranium Production Report - Annual
[7] World Uranium Mining Production 2022 (Updated May 2024)
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4 个月Excellent summary - exciting times ahead!
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4 个月KEY: No one really knows what price level will incentivize 2.1 billion pounds of new Uranium production globally, but many speculate that term contracts from utilities will need to be priced at $150 / lb or higher, based on an ever-shifting cost curve. ?If current forces continue to tighten the global demand / supply picture, a sharp price response in the Uranium spot and term contract price will eventually occur. ? ?