Air Force rescinds $100M award for Oklo microreactor

In August, the Sam Altman–backed startup was tentatively chosen as the winner of a military contract to build an SMR by 2027. Bids are now being reconsidered.
By Eric Wesoff

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A military plane sits on a runway surrounded by snowy mountains and pine trees
Eielson Air Force Base near Fairbanks, Alaska, the site of the microreactor project (U.S. Defense Dept.)

Oklo, a nuclear power upstart developing advanced microreactor” technology, suffered another setback in what has been a tumultuous year for the firm.

In August, Oklo was tentatively chosen as the contractor to build a microreactor at Alaska’s Eielson Air Force Base by the end of 2027 — a major vote of confidence in the company’s technology. But the military revoked the intent to award Oklo the planned $100-million-plus contract in late September, as reported by independent newsletter Northern Journal.

The pilot project, administered by the Air Force and the Defense Logistics Agency Energy, would have made Oklo the first advanced nuclear reactor plant to power a U.S. military site. The military’s goal is to have a reactor provide electricity and heat for the base, which is currently powered by a 15-megawatt coal plant. In 2019, Donald Trump signed an executive order promoting the deployment of small modular reactors in the military and for space exploration.

A competing bidder, Ultra Safe Nuclear, filed a protest notice citing a rule stating that contracting officers should conduct discussions” and post-bidding negotiations and exchanges for contracts worth $100 million or more. The Eielson project falls into this category, although a September report in Stars and Stripes estimated the cost to build the reactor at $60 million plus $3 million per year to operate and maintain. The intent-to-award decision favoring Oklo was rescinded after Ultra Safe Nuclear submitted the complaint.

All previous bidders are now being reconsidered for the award, including Oklo itself.

The decision presents a significant blow for Oklo, for which the Eielson project would have been a game-changing contract with a premier customer, one of only a handful it has landed. Oklo spokesperson Bonita Chester put a more optimistic spin on it, telling Canary Media that these kinds of stumbling blocks are often routine in the contracting process and that the company remains excited about the project.”

The buzzy startup — part of a cohort of advanced nuclear” companies aiming to usher in a new era of more affordable, smaller nuclear projects in the U.S. — has notched some wins in 2023.

In July, Oklo announced it would go public through a reverse merger with AltC Acquisition, a special-purpose acquisition company led by the now-former OpenAI CEO Sam Altman and Churchill Capital.

The merger is expected to be completed by July 12, 2024. The transaction would value Oklo at $850 million and furnish it with $500 million in capital to bring its reactor to market.

But, like almost every one of its competitors, the firm still doesn’t have the regulatory approval it needs to actually build a reactor in the U.S. Oklo is the sole microreactor firm to have begun navigating the U.S. Nuclear Regulatory Commission’s rigorous licensing process, and that’s come with some institutional friction. Early in 2022, the NRC denied Oklo’s application to construct and operate a microreactor at the Department of Energy’s Idaho National Laboratory site. The company is expected to address the regulator’s concerns and submit an updated application for a 15-megawatt power plant before the end of 2024.

Oklo is not the only next-gen nuclear company that’s encountering some bumps in the road.

Last week, advanced reactor maker NuScale — the first and only company to have won approval from the NRC for a small modular reactor design — lost its most prominent contract because of an inflation-driven spike in cost.

And last month, X-Energy, an advanced small nuclear reactor company, called off its $2 billion reverse merger, a move that could suggest growing market fatigue with special-purpose acquisition companies or advanced nuclear companies (or both).

Key leaders in the U.S. Department of Energy regard small modular reactors as an instrumental part of meeting the nation’s 2030 decarbonization goals. The fledgling industry is supported by billions in funding channeled through the Department of Energy as well as funding from the 2021 Bipartisan Infrastructure Law.

These hopes are based on the supposition that smaller reactors built in a factory and then transported to the deployment site will eliminate the industry’s long-standing record of gargantuan cost and schedule overruns. Nuclear evangelists insist that the power of learning curves will inevitably bring down the costs of these mass-produced smaller reactors over time.

That’s the theory behind the efficiency of small reactors, at least. But it will be difficult for advanced nuclear to get on these promised learning curves if projects keep getting canceled.

Eric Wesoff is the editorial director at Canary Media.