The U.S. Department of Energy (DOE) and a unit of Centrus Energy signed an agreement for the production of high assay low enriched uranium (HALEU), which is to be used in the next generation nuclear reactors. The department said it and Centrus Energy’s American Centrifuge Operating will share the $150 million cost 50-50 to demonstrate production of the fuel. Under the agreement, the company’s plant in Ohio will produce 20 kg of HALEU, enriched up to 19.75% by the end of 2023. Output is expected to continue in 2024 at 900 kilograms a year, depending on congressional appropriations, with additional options to produce more material under the contract in the future.

“This demonstration shows DOE’s commitment to working with industry partners to kickstart HALEU production at commercial scale to create more clean energy jobs and ensure the benefits of nuclear energy are accessible to all Americans,” Energy Secretary Granholm said.

HALEU is expected to be used in reactors in the works by companies including X-energy and TerraPower, that Biden administration sees as critical in cutting carbon emissions to fight climate change.

Meanwhile, critics of next generation nuclear plants say they pose a risk because they produce plutonium, a nuclear explosive that terrorists could try to obtain.

Currently, the only company sells HALEU is TENEX, a unit of Russia’s state owned atomic energy company Rosatom.

The Biden administration projects that more than 40 tonnes of HALEU will be needed before the decade ends, with additional amounts required each year, to deploy reactors to support its goal of reaching 100% clean electricity by 2035.

The United States has struggled to produce commercial HALEU. Washington awarded a shared-cost contract in 2019 to Centrus to build a demonstration facility which was due to start making HALEU this year. Production got pushed back to 2023, partly because of delays in obtaining storage containers due to supply chain issues during the global pandemic.