Russia’s invasion of Ukraine has disrupted energy supply chains and raised financing costs across the world, creating major headwinds for both fossil fuels and renewables. But there is an opportunity at hand for the US: nuclear energy exports, especially next-generation designs.
Russia’s domination (so far) of nuclear diplomacy
Rosatom, Russia’s state nuclear energy corporation, has dominated the international nuclear power market for the last decade, reaching well over $100 billion in foreign orders. Rosatom is highly competitive because it can offer a “cradle-to-grave” nuclear supply chain – everything from fueling, to operation, to waste disposal, and eventually decommissioning. All of this comes wrapped in a package deal of Russian diplomatic support and generous financing – often 90% or more – from state banks.
Russia has signed agreements for the supply of nuclear technology with at least 40 countries and has agreements for training and technical assistance with at least another 14. Megaprojects in Bangladesh and Egypt are already well-known, but proposed Russian reactor projects are found across the world: in Nigeria, Indonesia, Ghana, South Africa, and more. Rosatom’s small modular reactors (SMRs) like the RITM-200N will be especially attractive in emerging markets where large traditional models may be too costly. And Russian marketing of its SMRs is already in full swing.
Where is the West?
By contrast, the US, Canada, United Kingdom, South Korea, and others are lagging. Private companies from these countries have multiple promising models coming to market soon, such as the NuScale Power Module (77 MWe), GE-Hitachi’s BWRX-300 (300 MWe), Rolls-Royce’s UK SMR (470MWe), or KAERI’s SMART (100MWe). But even if these models might be the latest technology, the Western approach is more a la carte. Companies want to build and deliver reactors, not get involved in larger complicated investment (and maybe national security) packages. And while some financing can be found via export credit agencies like US ExIm Bank, Western firms largely rely on financing directly from buyer country governments. (For the Barakh nuclear power plant, for instance, the UAE government had to provide over $16 billion in direct loans to the project.) Moreover, the diplomatic backing is far less aggressive than what Russia brings to the table. The US holds 123 Agreements (peaceful nuclear cooperation agreements required for the transfer of substantial nuclear materials) with only two African countries, while Russia has cooperation agreements with at least 12.
An opportunity for the United States
Geopolitical backlash has already led to the cancellation of one of Russia’s reactor exports. While many African and Asian countries are taking a more neutral stance on the invasion, expansive financial and technological sanctions will likely present significant hurdles to already-tenuous nuclear export projects. Russian exports usually come with lifetime fuel lock-up agreements. Before the war, that was arguably a feature; after Russia’s clear use of energy as a political weapon, many countries will likely view the fuel supply dependence as a major vulnerability. Geopolitics aside, Russia will likely have a more difficult time completing projects while struggling financially, cut off from technological imports, and isolated from the global financial sector.
The United States is home to half the world’s advanced nuclear projects and could exploit this window. Fortunately, the US Development Finance Corporation (DFC) recently lifted its ban on supporting nuclear power projects, so additional financing could complement ExIm and present a near-full package for export. DFC and ExIm are reportedly planning to support export proposals to Romania and South Africa, but this is the tip of the iceberg. A reinvigorated US push on advanced nuclear in emerging markets would be aligned with multiple goals:
- Promoting energy security – Like renewables, advanced nuclear reactors can provide domestically produced electricity that is largely insulated from the volatile international energy markets and erratic supply chains. Industrial-scale low carbon energy is fundamental to achieving poverty reduction and adapting to climate change.
- Leading on large-scale clean energy – Nuclear power has the lowest lifecycle emissions of any energy source and can serve as a source of firm clean power to pair with existing hydro and ever-expanding wind and solar energy. The US lags significantly on funding clean energy in emerging markets, so this is an opportunity to reverse that trend.
- Pushing US technology and competitiveness – The US is home to a promising advanced nuclear technology industry, with many of the most innovative companies aiming to export to partners and allies abroad. It would greatly serve US strategic objectives to reclaim its position as the primary supplier of nuclear technology.
- Isolating Russia – Russian nuclear exports are part of a broader geopolitical strategy of developing interlinkages through energy dependence. If the US can present itself as a credible and trustworthy alternative, it would degrade Russia’s ability to leverage this influence and pay dividends for US competitiveness for decades to come.
The USG has taken some initial steps in the right direction, but to really capitalize on this new window of opportunity, it must get far more aggressive in four areas:
- Diplomatic support – The Administration needs to work with recipient countries directly to get initial deals moving forward. The Romania-NuScale deal is a promising example.
- Financial tools – DFC has signed an agreement to support a NuScale bid in South Africa, but is overall underspending on generation technologies.
- Technology innovation – The US is investing in R&D, but needs to engage early with recipient countries in order to build necessary technical capacity.
- Building fuel supply chains – No project will get built without reliable fuel supply (and waste management). Building a HALEU supply chain can service these exports in the long-term, and also present an alternative to Russia for existing reactors in the short-term. In a related example, Westinghouse re-created fuel that can be used in Ukraine’s Soviet-era reactors which now allows it to serve other Russian-spec reactors around the world that wish to cut dependency on Russia.