By Kennedy Maize
In December of 1996, Federal Reserve Board Chairman Alan Greenspan, commenting on the effect of the “dot-com bubble” on the stock market, coined the term “irrational exuberance.”
Some observers of the hype over an end to the decades-long doldrums of U.S. nuclear power are casting a gimlet eye at the claims. Could they be cockeyed? Is there less than meets the eye? Could the frenzy for new nukes – small, medium, or large – warrant Greenspan’s 1996 reaction today?
Legendary investment bank J.P. Morgan Chase & Co. has some qualms about a new generation of nukes. In a Bloomberg interview, Rama Variankaval, J.P. Morgan’s global head of corporate advisory said in street-speak, “We’ve spent so much time on nuclear that I’ve become worried that maybe we’re over indexing on this problem.” He added, “The demand of new power is materializing in real time, but the supply of new nuclear may take time.”
Variankaval said nuclear has a future, but “the reality of nuclear is it’s not ready for prime time.” He said he felt the over-the-top optimism during meetings with industry officials in New York during Climate Week (Sept. 21-28).
Variankaval had some cold water to pour over the fevered brows of the nuclear boosters. As Bloomberg summarized them: nukes come with very high upfront costs. They can take at least a decade to build. Despite recent demand for carbon-free power, nuclear construction has been glacial. Much of the advanced technology is unproven.
Variankaval is also skeptical about small modular reactors and the persistent claims of imminence of fusion. SMR technology, he said, is “probably still a handful of years away from being a cost-competitive source of energy. Fusion is likely two handfuls of years away.”
One trend boosting nuclear optimism is the surge of AI data centers and their voracious appetite for electric power. Many data center proponents link their power needs to on-site SMR’s, rather than taking power from the more conventional big iron, either over the grid, or collocated with an existing power plant.
SMRs and data centers are likely a mismatch, according to Tyler Norris, a James B. Duke Fellow at Duke University’s Nicholas School of the Environment, where his PhD research focuses on electric power systems.
In recent Twitter post, Norris said, “I don’t think there’s a credible argument for behind the meter nuclear at data centers in the near future, and by near future, I mean the next couple of decades. Part of the problem you’re going to have too, is if you’re talking about a brand-new [reactor], the availability questions are going to be enormous, right?
“So you’re going to want to see that thing operate for 10 years before you say there’s enough data to plug my $20-50 billion data center into that machine. So it’s just hard to imagine that is going to have any type of uptake, even in the 2030s… I am bullish on some form of new nuclear coming to market, we’re just saying not on site.”
When it comes to nuclear exuberance, nothing tops the Trump administration’s atomic hopes and prayers. Politico describes it as “a nuclear moonshot.”
The administration has a short-term goal of having “three advanced reactors go critical by July 4, 2026.” The White House knows the only way it can pull this off is to avoid asking the Nuclear Regulatory Commission to certify that the designs are safe. So DOE deems its own review is adequate.
Self-interest applies not only to DOE’s review of the reactor designs, but also to Energy Secretary Chris Wright’s connection to one of the agency’s favored advanced designs, Oklo’s fast reactor. Wright once sat on Oklo’s board and Wright’s natural gas firm, Liberty Energy, invested in the nuclear startup before he joined the Trump administration.
In July, Oklo and Liberty Energy “launched a strategic alliance to accelerate integrated power solutions for large-scale, high-demand customers, including data centers, industrial facilities, and utility-scale sites.”
Oklo’s plans start with a tiny molten sodium cooled fast reactor producing .75 MW of electric power, which it claims is scalable to 75 MW. It had support from the Biden administration well before Trump took office this year. According to Politico, Oklo founder and CEO Jacob DeWitte “said he has not been in touch with Energy Secretary Chris Wright…since Wright joined the Cabinet.”
Wright formally severed ties with Oklo (NYSE:OKLO) when Trump selected him to head the energy department, but it’s hard to believe that the well-known connection has not influenced the agency’s judgments even with Wright’s hands-off pledge.
California-based Oklo has been doing very well at DOE and the Aurora Powerhouse appears to be the agency’s poster nuke.
In August, the agency selected Oklo among 11 firms for its Reactor Pilot Program, which aims to have three test reactors operating on July 4, 2026. On Sept. 30, Oklo was one of three firms DOE picked for its newly-established Fuel Line Pilot Program. That DOE effort aims at developing the advanced nuclear fuel needed for its Independence Day adventure.
Fuel is on the critical path to July 4th. Several of the firms selected for the pilot program plan to use new reactor fuels instead of conventional low-enriched uranium, including Oklo, Antares Nuclear, Atomic Alchemy, and Radiant Industries, are all designed around High Assay Low Enriched Uranium (HALEU) fuel, not yet available. That makes July 4th look like a difficult target.
The likely unavailability of HALEU has led to a dustup between DOE Deputy Secretary James Danly (former Trump 1 appointee to the Federal Energy Regulatory Commission), who is running the advanced nuclear program, and the agency’s largest and most important component, the U.S. nuclear weapons program. The National Nuclear Security Administration’s proposed Fiscal Year 2026 budget is 65% of DOE’s total of $46 billion.
A driving factor in the NNSA budget is a congressional mandate to produce 80 plutonium pits – the ultimate business end of a nuclear weapon – annually by 2030, 30 at Los Alamos National Laboratory in New Mexico and 50 of a different design at the Savannah River Site in South Carolina.
That’s far short of the current capacity at Los Alamos and Savannah River. The U.S. has not produced plutonium since 1992, relying on recycling older weapons for the crucial element.
In July, Danly sent a memo to NNSA ordering deliver of 20 tonnes of plutonium to the civilian program presumably to be used in advanced reactors. DeWitte told Politico in late September that his paper fast reactor could use plutonium as a “bridge” until HALEU is available.
NNSA pushed back on the Danly order, noting that diverting the plutonium was counter to Congressional direction and could jeopardize national security. Danly retaliated in August, Axios reported, ordering a special 120-day study of nuclear pit production and management practices at Los Alamos and Savannah River, implying that changes in policy and personnel might be in order.
It’s unclear what kind of fireworks may result at DOE between now and July 4th.
The Quad Report: to subscribe, for back issues, and a searchable archive.