As the nuclear industry prepares for a significant expansion, there are multiple product segments and market opportunities for manufacturers to consider. Here, we outline paths for manufacturers to enter and excel within the nuclear supply chain.
May 4, 2024
As nations recommit to sustainable energy solutions, the nuclear power industry is poised for a significant resurgence. Presently, over 90 commercial reactors are operating across the United States, yet only three have been commissioned in the last two decades. But this is set to change dramatically with a bipartisan push towards nuclear energy, signaling a new surge of activity on the horizon. Unlike the traditional approach of building massive nuclear plants, the industry is shifting towards modular construction—a technique Naval shipbuilding has perfected over decades, building components for nuclear reactors (and entire ships) in modular form in a shop fabrication setting, then assembling them in shipyards. This development heralds a transformative era in nuclear construction, where commercial enterprises must incorporate modular methodologies that combine efficiency with advanced nuclear reactor technologies.
In the burgeoning nuclear market, Original Equipment Manufacturers (OEMs) such as TerraPower, Westinghouse, GE-Hitachi, and X-energy play pivotal roles. Often referred to as developers, these entities are the primary gatekeepers for new manufacturers aspiring to enter the nuclear industry. Their influence stretches across domestic and international realms, making them indispensable partners in the supply chain of nuclear structures, systems, components, and services.
Engaging with these OEMs is not merely about fulfilling supply orders; it involves aligning with their strategic goals, understanding their project timelines, and adhering to stringent nuclear quality standards. The relationship with OEMs is foundational, setting the tone for how new entrants can navigate the complex nuclear sector landscape.
Some of these domestic OEMs have longstanding relationships with second tier suppliers of components, while many of the newest players in the market have not yet secured vendors to produce their structures, systems, and components. GE Hitachi (GEH), for example, is actively engaged in projects in Canada, where they likely have already established their supplier network for the current phase of projects. Thus, while engaging with more established players may seem promising, the reality is that their need for new suppliers might be limited unless their international and domestic order books expand significantly. If such expansion occurs, it could surpass the capacity of their existing suppliers, potentially opening up new opportunities for engagement.
On the other hand, many of the newest players in the nuclear market have not yet secured vendors to produce their structures, systems, and components. This presents a broader opportunity for new manufacturers to capture market share that has not yet been locked down. If the international order book for more established companies also materializes, there may be opportunities to support the increased capacity needed to execute large-scale projects for these incumbent players.
Thus, while the potential for significant engagements with some established OEMs may be uncertain without a surge in demand, the overall landscape in the nuclear sector offers multiple entry points for new manufacturers. Understanding the specific circumstances and needs of each OEM—whether they are in a phase of expansion or steady supply chain management—is crucial for effectively positioning oneself in this competitive industry.
As the nuclear industry prepares for a significant expansion, there are multiple product segments and market opportunities for manufacturers to consider. The need for high-quality, precision-engineered components and innovative construction methodologies is more critical than ever, given not only the stringent safety and durability standards required in nuclear power generation, but also the need within the energy industry to deliver this zero-carbon technology economically on par with alternative sources of heat and electricity.
This section outlines key areas where manufacturers can both enter and excel within the nuclear supply chain. From structural elements to specialized piping systems and advanced modular construction techniques, each segment presents unique challenges and opportunities. Engaging in these areas will require manufacturers to harness cutting-edge technologies, develop specialized skills, and build robust partnerships with industry leaders. Given the complexity and specialized nature of these segments, manufacturers are unlikely to succeed across all areas; therefore, focusing on specific niches where they can offer distinct value and expertise may be in their best interest. As daunting as the industry may seem, much of the work is nearly the same as modern manufacturing in other industries. By focusing efforts where best suited to make an economic difference, manufacturers can carve out a niche in the nuclear industry, contributing to the safe and efficient construction of the next generation of nuclear facilities and delivering the promise of this energy source to the global energy market.
The integrity of nuclear facilities relies heavily on the quality of structural components used in construction. These materials—primarily steel and concrete composites—must meet the highest standards of safety and durability. Manufacturers entering this segment need to excel in producing robust materials that can withstand the rigors of nuclear operations over decades. That said, some of the advanced reactor designs no longer require the civil structural robustness of their forebears due to advances in fuels and reactor systems that bring the critical containment of radionuclides into a smaller envelope. Thus, there are opportunities to access the structural aspects of the supply chain more easily with a number of OEMs.
The nuclear industry's demand for specialized components, such as canned motor pumps or high performance valves, offers lucrative opportunities for manufacturers. These components are characterized by their low volumes but high margins, demanding precision engineering and extensive customization. Success in this segment requires a deep understanding of nuclear specifications and the ability to engage in intensive R&D activities to adapt to novel operational conditions involving unique temperatures, pressures, and chemistries.
It's important to note that there is a high barrier to entry in this segment, primarily due to the entrenched relationships established by traditional OEMs such as GE-Hitachi and Westinghouse. For instance, Westinghouse has already established its vendor for the AP300 pump, which remains the same as its AP1000 pump vendor, illustrating the continuity and exclusivity of such supplier relationships.
However, the landscape for non-light water reactor designs (and novel light water designs) presents a different scenario. These newer and most advanced reactor designs have not yet solidified their supplier networks for specialized components. Many of these designs also operate in a temperature regime where existing components are not suitable. This opens a window of opportunity for new entrants to establish themselves in a field with less competition from established players. Engaging with developers of these advanced reactors can allow new manufacturers to enter the market, potentially setting the standard for component supply in emerging nuclear technologies.
Piping in nuclear plants involves complex specifications with a focus on quality and longevity to prevent catastrophic failure and minimize the life cycle maintenance costs of the systems. Many reactor designs include ubiquitous materials such as stainless steel, titanium, and nickel alloys.However, some of the more advanced reactor designs are still in the process of determining the best materials that can withstand the unique conditions of coolant chemistry, radiation exposure, and the pressure-temperature regimes typical during normal operations and postulated transient scenarios.
Manufacturers equipped with advanced welding capabilities and the flexibility to work with exotic materials are well-positioned to carve out significant market share in this segment. Given the universal need for high-quality piping across various reactor designs, a manufacturer with the right capabilities could support multiple OEMs from a single fabrication shop. This aspect of the industry highlights the extensive applicability of this segment across different OEMs, suggesting a strategic opportunity for manufacturers to establish strong, ongoing relationships with multiple nuclear projects simultaneously.
By investing in and expanding their capabilities in advanced fabrication and welding techniques, manufacturers can become indispensable partners to the nuclear industry, ensuring a steady demand for their services across a wide range of nuclear plant designs and specifications.
This modern manufacturing technique holds significant promise for producing bespoke components that meet specific design criteria. Its application in nuclear manufacturing not only enhances flexibility but also reduces waste, making it an attractive option for both new entrants and established players.
The technique provides benefits across the life cycle of a plant. In the conceptual phases, it allows for rapid creation of prototypes, which can be used to test and refine designs quickly and iteratively. This can significantly reduce the time it takes to bring a new product to market. Further, additive manufacturing is not limited by traditional manufacturing constraints. This allows for the creation of complex geometries and intricate designs that would be difficult or impossible to produce using other methods. The technique uses only the material needed to create the part, which minimizes waste. With additive manufacturing, parts can be produced on-demand, which can help to reduce the need for large inventories. This can free up capital and storage space. Additive manufacturing can also be used to create complex parts that would traditionally require multiple components. This can simplify assembly and improve product performance. Because traditional forgings and castings are not used, additive manufacturing allows for the creation of lightweight parts with strong internal lattice structures. This could be beneficial for nuclear applications, where weight reduction has trickle down effects (e.g. seismic response, support costs).
Although typically viewed as commodity products, electrical systems in nuclear plants require high reliability. Differentiating in this crowded market segment involves focusing on innovation in safety and integration techniques. However, experienced manufacturers that can deliver a complete electro-mechanical module could differentiate themselves with a number of OEMs.
With the growing trend towards AI and autonomous operations, the I&C segment offers potential for substantial operational savings for plant owners. Manufacturers that innovate in smart systems and integrate advanced analytics will find themselves at a competitive advantage.
Manufacturers in the nuclear industry can seize significant opportunities by specializing in the modularization of plant designs and the execution of these modules with specialized capabilities. Modularization of a design involves collaborating with OEMs to transform complex nuclear reactor designs into constructable modules. This process not only facilitates more controlled and efficient manufacturing environments but also allows manufacturers to implement advanced construction techniques that enhance precision and constructability, increase repetition by the same workforce, and reduce overall construction timelines. Once these modules are designed and created, assembly of the modules — or the physical construction of these pre-fabricated parts into a cohesive system — becomes the next critical step.
In addition, manufacturers have the opportunity to accelerate the construction process across multiple locations. By fabricating modules near resources or in areas with specialized labor, manufacturers can reduce logistics costs and mitigate risks associated with final construction site constraints. The final phase, mate-up of modules at the installation location, demands precision engineering to ensure that all modules align correctly according to strict tolerances. This not only ensures structural integrity and safety but, when executed with quality, also significantly simplifies the overall construction process, leading to faster project completion of the nuclear facility.
By engaging in these segments, manufacturers can position themselves as key players in the nuclear industry, providing essential services that enhance the efficiency and cost-effectiveness of nuclear power plant construction.
Deciding on a market entry strategy involves a critical assessment of a company’s core strengths and market opportunities. The starting point of strategy development is the determination of whether the manufacturer intends to supply safety or non-safety related components. As discussed earlier, one objective of the OEMs designing the new reactors is to limit the number of safety related structures, systems and components. This objective is motivated by the goal of reducing cost and justified by the safety cases for the new designs. There will still be high margins on the safety-related components, but higher volumes of non-safety related components. The opportunities of supplying non-safety related components, however, is tempered by the OEMs being strongly encouraged by the plant buyer’s procurement process to source as many of the plant components locally. The market entry strategies can vary widely:
Market entry strategy should be informed by an organization’s strengths and capabilities, as well as their risk tolerance and interest in expanding into non-core segments. By engaging internal and external stakeholders – and potentially outside consultants or advisors – into conversations about approach, organizations can hone their market entry strategy to best align with the organization’s vision.
The financing model in the nuclear industry is evolving. While many of the advanced reactor technologies have a pedigree in prior, successful plants, there is perceived risk in first-of-a-kind deployments of any given design, based both on technology and on the results of recent projects in the industry. Traditional models based on large, capital-intensive investments are making way for more modular, phased investments. This scaling will filter down into the supply chain. This creates new opportunities for manufacturers to explore new approaches to partnerships, such as:
As the nuclear industry embraces more flexible and innovative financing models, manufacturers should proactively seize these evolving opportunities to shape their strategic roles. By adapting to these new partnership structures, companies can enhance their market adaptability and financial resilience.
With the nuclear industry on the cusp of a new growth phase, now is the time for potential players to actively engage and establish their presence in the market. The shift towards modular construction, combined with advancements in nuclear technology, presents unique opportunities for innovation and expansion. Companies that can navigate the complex regulatory environment, build strong relationships with OEMs, and leverage advanced manufacturing techniques will be well-positioned to capitalize on the upcoming wave of nuclear energy projects. In this dynamic landscape, waiting on the sidelines is not an option; proactive engagement and strategic planning are key to unlocking the potential of the nuclear manufacturing game.
If you're looking to explore how your business can effectively engage with the nuclear industry, don't hesitate to contact the energy industry experts at Solestiss. Let us help you harness the significant opportunities this renaissance in nuclear energy has to offer.
