New Chapter for US Nuclear in Trade Deals?
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The White House has disclosed details of a $550 billion U.S.-Japan investment agreement, focusing on U.S. energy technologies. As part of this, an $80 billion deal has been made with nuclear manufacturer Westinghouse Electric Company to aid the construction of a new reactor fleet in the U.S. These initiatives form part of the most aggressive U.S. government effort to support nuclear energy in several decades, although key details remain to be resolved.
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Major U.S.-Japan Investment to Bolster Nuclear Energy
Last week, new details were unveiled by the White House regarding the $550 billion U.S.-Japan investment pact agreed upon earlier this year. The agreement will provide significant funds to U.S. energy technologies, including nuclear reactors, power plant and grid parts, and crucial minerals. Concurrently, an $80 billion partnership with Westinghouse Electric Company, a nuclear manufacturer, was announced to aid in the construction of a new fleet of reactors in the United States. The White House disclosed that a portion of the U.S.-Japan investment would go towards the Westinghouse deal. These initiatives could represent the most extensive U.S. government action to back nuclear energy in several decades, although key aspects are yet to be clarified.
Details and Significance of the Deals
The joint fact sheet released as part of the announcement outlines up to $100 billion each for Westinghouse and GE Vernova Hitachi for constructing nuclear reactors. Furthermore, Bechtel and GE Vernona are set to receive $25 billion each for power equipment and services, with another $25 billion going to Carrier to facilitate cooling systems. The document also mentions NuScale and ENTRA1, but does not specify a dollar amount for them. The total investment from Japan is expected to reach $550 billion by the end of President Trump’s term in 2029.
The U.S.-Japan trade agreement investments will be determined by the U.S. president, who will form an investment committee headed by the secretary of commerce to oversee and recommend funding decisions. A new U.S. Investment Accelerator, located in the Commerce Department, will manage these investments. Each project will operate through a special purpose vehicle (SPV) controlled by the United States or its representatives.
The deal represents a significant move by the Trump administration to strengthen U.S. nuclear capabilities and rebalance trade. The administration had already advocated for the construction of 10 new AP1000s as part of a “nuclear renaissance” to stimulate AI competitiveness and economic growth. The deal can potentially facilitate the private capital and supply chain investments required to solidify new builds, providing a vital boost to the stagnant U.S. nuclear industry.
Use of Funds and Remaining Uncertainties
Despite the positive reception from industry analysts and stakeholders, the implementation of the new investments remains vague. It has been suggested that some of the funding could go towards the VC Summer restart in South Carolina, which Brookfield recently acquired. However, uncertainty surrounds the specific stakeholders who will receive funding, the allocation of the $80 billion commitment, and the legal authorities that will oversee the funds’ disbursement.
Key Stakeholders and Remaining Gaps
Currently, the announced partnerships are centered around service and equipment providers. For the envisioned nuclear projects to succeed commercially, more key stakeholders, especially offtake partners, need to be involved. Historically, many nuclear plants were jointly owned by regulated utilities or public power cooperatives, which could recover costs through their general rate base or by selling to specific offtakers.
There are several possible routes for the administration to provide support, such as through direct loans, credit enhancements, cost overrun insurance, or construction contingencies. Other options include prepaid power purchase agreements and federal offtake backstops to provide early revenue certainty, or equity stakes at the project level. The funding could also be directed towards local workforce development, procurement, waste disposal, or other activities aimed at strengthening the supply chain and enabling environments.
The way these different mechanisms are implemented could have significant impacts on project outcomes. The administration will need to consider how these dynamics affect initial planning and regulatory approval from relevant agencies ranging from the State Public Utility Commissions to the Nuclear Regulatory Commission, which have traditionally been significant challenges for nuclear projects.
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