Bill Gates’ nuclear startup wins $750M, loses sole fuel source

TerraPower notches a record-setting investment round led by South Korea’s SK. But it has no supplier of the enriched fuel it needs, now that sourcing from Russia is off the table.
By Eric Wesoff

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(Nicholas Kamm/AFP via Getty Images)

Nuclear fission startup TerraPower, founded and chaired by Microsoft co-founder Bill Gates, has raised $750 million to develop advanced nuclear reactors to serve as alternatives to the light-water reactors that make up the vast majority of the world’s civilian nuclear fleet. But cash alone won’t be enough to get the startup over the many hurdles that stand in its way.

TerraPower’s Natrium fast reactor design is radically different from the design of traditional nuclear reactors. For starters, it’s smaller. A typical reactor in the U.S. produces 1,000 megawatts of power. TerraPower’s first demonstration reactor, now being planned for a site in Wyoming, will have a capacity of 345 megawatts. The smaller size could enable the reactor to be built cheaply in a factory and not expensively on-site.

The Natrium reactor will also use a different fuel and a different coolant than standard nuclear reactors. It will be fueled by high-assay low-enriched uranium (HALEU), which is enriched with more uranium than the fuel used in traditional nuclear plants. And the coolant will be high-temperature liquid sodium instead of water.

TerraPower’s new funding includes $250 million from South Korean chaebol SK Group. Previous funding for the firm has come from Gates and Warren Buffett of Berkshire Hathaway. The company was also awarded $80 million from the U.S. Department of Energy to work on its Natrium reactor design.

Canary covered TerraPower’s technology in detail last year when the firm announced that Bechtel will build its first reactor in Kemmerer, Wyoming, near the site of a coal-fired power plant that is scheduled to be shut down. The U.S. Department of Energy and private investors will split the cost of the demonstration project.

The startup claims that this first reactor will be in operation by 2028 and will cost $4 billion, including engineering, procurement and construction. If TerraPower comes anywhere close to meeting those wildly ambitious goals, it will strongly differentiate itself from the traditional nuclear industry, which is notorious for missed deadlines and shocking cost overruns. The only two conventional nuclear reactors currently under construction in the U.S., at the Vogtle plant in Georgia, are already six years overdue and will cost utility customers over $30 billion, more than double the original price tag.

Fuel folly?

One big new problem for TerraPower emerged earlier this year: its fuel source. The only facility currently able to supply commercial quantities of HALEU is in Russia. That wasn’t a great situation even before Russia invaded Ukraine. Now that the war in Ukraine has been grinding on for six months and shows no signs of resolution, relying on fuel sourced from Russia is untenable.

In March, TerraPower said it had cut ties with Tenex, the Russian state-owned company from which it had planned to source HALEU, Wyoming-based nonprofit news outlet WyoFile reported. When Russia invaded Ukraine it became very clear, for a whole set of reasons — moral reasons as well as commercial reasons — that using Russian fuel is no longer an option for us,” said Jeff Navin, TerraPower’s director of external affairs.

TerraPower did just get good news this week when President Biden signed the Inflation Reduction Act into law. The legislation includes $700 million to help build up a domestic supply chain for HALEU. The funding could give a boost to the U.S. Department of Energy’s plans to launch a congressionally authorized HALEU Availability Program. But developing HALEU production capacity in the U.S. will take years.

TerraPower does not have wiggle room to delay. If it doesn’t complete its demonstration project by 2028, it stands to lose out on up to $2 billion in federal funding from the U.S. Department of Energy’s Advanced Reactor Demonstration Program and the opportunity for expedited federal regulatory reviews.

Some experts are skeptical that TerraPower will make the deadline, especially now that it has no source of fuel. I didn’t think it was doable before this monkey wrench was thrown in,” Edwin Lyman, director of nuclear power safety for the Union of Concerned Scientists, told WyoFile in March.

A nuclear renaissance?

Despite these headwinds, TerraPower did just raise $750 million, so it’s not alone in anticipating a revival of the nuclear power industry.

The Inflation Reduction Act will help not just HALEU-fueled TerraPower but the rest of the nuclear energy sector too: It includes a production tax credit for nuclear power, an incentive that will benefit struggling nuclear plants that already exist across the country as well as developers of new types of nuclear reactors. In addition to TerraPower, that latter category includes U.S. startups NuScale and Oklo.

The Biden administration’s 2030 climate goals rely in part on nuclear power — currently the largest source of carbon-free electricity in the U.S. The bipartisan infrastructure law Biden signed late last year contains $6 billion to support existing nuclear plants and $3.2 billion for development of advanced nuclear power technology. The Department of Energy’s Loan Programs Office has $11 billion in funding for nuclear plants and nuclear supply chains, according to Jigar Shah, director of the office.

Even some political leaders who advocated shutting down nuclear plants in the past are now arguing for keeping them open. Last week, California Governor Gavin Newsom (D) proposed legislation designed to help the state’s last nuclear plant stay in operation beyond its planned shut-off date of 2025, arguing that it’s needed to maintain the stability of the power grid in the face of increased stresses from climate-change-fueled disasters like heat waves and wildfires.

And states including Illinois, New York and New Jersey have passed laws that offer economic aid to keep their nuclear power plants up and running.

The nuclear industry has been threatening a renaissance for decades, but deployment of new nuclear power has never tracked the aspirational rhetoric.

Is that finally changing? Escalating concerns about climate change, plus a confluence of shifts in technology, politics, economics and public sentiment, might finally reanimate this ossified industry. While there have been false starts for nuclear power in the past, there seems more cause for optimism than usual.

It’s debatable whether optimism should apply to TerraPower, considering the unique challenges it faces. But some reputable investors are betting that it should — in the largest private funding round ever for advanced nuclear fission technology.

Eric Wesoff is editorial director at Canary Media.