The U.S. Department of Energy last month said it would award $1 billion to X-energy, an Amazon-backed advanced nuclear startup working to bring four novel 80-megawatt electric reactors online at a Dow Chemical facility in Seadrift, Texas, in the early 2030s. The award nearly doubles the federal government's commitment to X-energy, following a $1.2 billion investment in early 2021. Both tranches were structured as 50-50 cost-sharing agreements under the DOE's Advanced Reactor Demonstration Program, launched in 2020 to commercialize next-generation nuclear technologies. The new funding matters because it signals federal willingness to back first-of-a-kind reactor projects that have struggled for decades with blown deadlines and blown budgets.
The Seadrift project now enjoys a level of federal funding that rivals any other advanced nuclear development in the nation. The Bill Gates-backed TerraPower's commercial demonstration project in Wyoming, which broke ground earlier this year, has also been awarded up to $2 billion in cost-sharing funds through the ARDP. X-energy's project does not yet have a license from the Nuclear Regulatory Commission, though it received a key environmental approval in May and expects the regulator to green-light reactor construction in early 2027. Only TerraPower and the Google-backed startup Kairos Power currently have NRC construction permits.
Cost remains the central uncertainty. In early 2023, before it had fully engaged with Dow or selected Seadrift for its commercial debut, X-energy estimated the cost of completing the full ARDP scope between $4.75 billion and $5.75 billion. X-energy has not publicly updated its cost estimates since then, though the federal funding of up to $2.1 billion implies at least $4.2 billion will be spent on the project. In securities filings this year, however, it said that it faces the same broad inflationary and trade-related pressures that have pushed up costs for natural gas, renewables, and other types of energy infrastructure. As of June 30, the DOE had reimbursed X-energy for about $546 million in spending under the ARDP agreement.
The project's economics will be tested against competing energy sources. The dossier notes that Tennessee Valley Authority and GE Vernova Hitachi plan to spend more than $14,000 per kilowatt to bring a 300-MW electric BWRX-300 reactor online, while wind and solar developers spent well under $2,000 per kilowatt to bring utility-scale projects online in 2022. X-energy's high-temperature gas reactor uses graphite to control the reaction and helium to transfer heat, along with expensive TRISO fuel designed to withstand superhot conditions. The Xe-100's high operating temperatures make it suited for industrial heat and power applications like Dow's Seadrift petrochemical plant, where it would replace aging steam and power assets and reduce annual greenhouse gas emissions by approximately 440,000 metric tons.
Several limitations temper the near-term outlook. Dow is expected to make a final investment decision on the project in 2028 at the earliest, meaning the commercial commitment is not yet locked in. CEO J. Clay Sell told investors on an Aug. 13 earnings call that he expected the government to contribute more funding as needed, saying, "I'm confident to the extent more dollars will be required, they will be provided by our partners at the Department of Energy and Commerce. We'll see where the number ends up." Andrew Kleiman, an energy transition research analyst with Wood Mackenzie, said there is no indication yet that X-energy's final project costs will be substantially higher than its 2023 estimate. What to watch: NRC construction permit approval in early 2027, updated cost estimates, and Dow's final investment decision in 2028.