Nuclear energy news: Funding crisis at the NNSA amid shutdown,SMRs

The nuclear energy sector is currently navigating two parallel storms. On one hand, the U.S. National Nuclear Security Administration (NNSA) is confronting a funding crisis aggravated by a government shutdown and internal budget re-allocations. On the other hand, small modular reactors (SMRs) are being pitched as a next-generation solution for carbon-free baseload power—but their path to deployment is fraught with technical, economic, and regulatory challenges.

This article examines the funding crisis at the NNSA in the context of the shutdown, explores the strategic shifts in U.S. federal energy and defense budgets, and evaluates the opportunities and obstacles facing SMRs in the near term.

Part I: The Funding Crisis at the NNSA

What Is the NNSA, and Why It Matters

The National Nuclear Security Administration (NNSA) is a semi-autonomous agency within the U.S. Department of Energy tasked with critical national security responsibilities: designing, producing, maintaining, and securing the U.S. nuclear weapons stockpile; managing naval nuclear propulsion; and advancing nonproliferation efforts. 

Given its role, any disruption to NNSA operations can ripple through national security, nonproliferation, and energy domains.

Shutdown Risks: How Close to the Brink?

As of early October 2025, the NNSA is facing an acute funding squeeze directly tied to the broader U.S. government shutdown. The Department of Energy warns that the agency has only enough funding for full operations for about eight more days. 

Under the DOE’s contingency plan, approximately 60% of staff would be furloughed if funding lapses, leaving only a minimal cadre of personnel to monitor “critical control operations systems” involving nuclear materials. 

In parallel, the U.S. Nuclear Regulatory Commission (NRC) is also ramping down functions: licensing, certification, environmental reviews, and inspections will be suspended as the agency exhausts its reserves and enters its contingency mode. 

While past shutdowns have seen minimal operational disruption in the nuclear domain, the current environment is more precarious. The DOE notes that previously it could carry over funding for a month or more during a lapse, but this time the margin may be as short as a week. 

Staffing Cuts & Internal Strains

Even before the shutdown, the NNSA was under stress from internal personnel changes. In early 2025, sweeping layoffs affected many DOE departments, including NNSA. Reports suggest around 325 positions in NNSA were cut as part of a broader reorganization. 

Some of these cuts were later reversed, as stakeholders recognized the risk to critical nuclear infrastructure. 

The layoffs and subsequent reversals have reportedly undermined continuity in key programs and raised confidence concerns about the stability of the nuclear enterprise. 

Budget Reprioritization: Nonproliferation vs Weapons Modernization

Even beyond shutdown mechanics, deeper structural pressures are reshaping the NNSA’s budget. In March 2025, Congress transferred $185 million away from the NNSA’s nonproliferation portfolio (Defense Nuclear Nonproliferation, DNN) toward weapons modernization and core nuclear weapons programs. 

This reallocation comes at a time when the demand for nonproliferation safeguards is arguably rising, especially amid global tensions and the risk of nuclear breakout. Several analysts warn that slashing DNN funding while accelerating weapons modernization undermines the long-term security architecture. 

At the same time, the proposed fiscal year 2026 DOE budget underscores the shift: the NNSA would receive a 24% increase over FY 2025, with 83% of that earmarked for weapons-related activities. 

However, the budget backdrop is uneven: the non-defense energy programs face deep cuts, renewable energy R&D is scaled back, and many clean energy initiatives are being de-emphasized. 

Infrastructure Challenges: Delays and Overruns

The NNSA’s funding and staffing pressures are compounded by infrastructure bottlenecks. A looming concern is the new uranium processing facility at Oak Ridge, Tennessee—intended to replace aging infrastructure. That project is experiencing major delays and cost overrun. What was once projected for completion in 2026 at ~$6.5 billion is now anticipated to conclude in 2034 at over $10 billion. 

Meanwhile, the old facility (Building 9212) continues to degrade, posing safety and operational risks. The Government Accountability Office has flagged concerns about corrosion, structural vulnerabilities, and risk of shutdowns under strain. 

Adding to the strain, the DOE has launched a 120-day “special study” into plutonium pit production challenges—another high-stakes program under NNSA oversight. 

Implications & Risks

• National Security Vulnerability: If staffing lapses and oversight gaps occur, nuclear weapons reliability, security, and responsiveness could be compromised—or at least perceived as weakened.

• Operational Disruption: Restarting systems after a shutdown is expensive and logistically complex, especially when resources and institutional memory have been eroded.

• Loss of Expertise: Continued turnover and budget uncertainty may drive capable talent out of the system, creating long-term gaps in technical capacity.

• International Confidence: Allies, nonproliferation frameworks, and adversaries alike may interpret instability in U.S. nuclear stewardship as an opening for nuclear escalation or questioning of U.S. credibility.

Taken together, the funding crisis at the NNSA represents more than budgetary turbulence—it throws into sharp relief the tradeoffs between military modernization, nonproliferation, infrastructure renewal, and the continuity of nuclear stewardship under political strain.

Part II: Small Modular Reactors (SMRs) — Promise and Pitfalls

While the NNSA, largely focused on nuclear weapons and security, grapples with funding and capacity challenges, the energy side of nuclear is undergoing its own transition. Small modular reactors (SMRs) are at the heart of this transition narrative. Let’s explore what SMRs are, why they are being championed, their current state, and the hurdles ahead.

What Are SMRs?

“Small modular reactor” (SMR) refers to a class of nuclear reactors with a smaller power output than traditional gigawatt-scale plants, typically in the tens to a few hundreds of megawatts. They are designed to be fabricated offsite in modular units and assembled on location, which theoretically reduces construction risk and time. 

Variants include light-water SMRs, molten salt reactors, high-temperature gas-cooled designs, and others. The modular and scalable nature allows for incremental deployment, adaptation to grid demand, and potentially lower upfront capital risk.

Why SMRs Are Getting Attention

There’s a confluence of drivers pushing SMRs to the forefront of energy policy discussions:

1. Decarbonization Needs
   To meet climate goals, many jurisdictions require firm, low-carbon baseload power. SMRs promise to fill gaps not reliably met by wind, solar, or storage alone.

2. Grid Flexibility & Sizing
   The modular nature allows smaller units to scale with demand or replace retiring fossil units, making integration easier in varied grid settings.

3. Lower Capital Risk
   The idea is that manufacturing standardized modules in factories will reduce cost overruns and schedule slippages compared to bespoke, large reactors.

4. Potential for Dual Use
   Some SMR concepts have synergy with military or remote installations, microgrids, district heating, or industrial applications—making them appealing for broader energy security.

5. Government Support & Loan Tools
   In the FY 2026 DOE budget, there is a $750 million request for credit subsidy toward SMR and advanced nuclear uses via the DOE’s Loan Programs Office (LPO). 

However, despite the buzz, SMRs are not a panacea.

The Challenges Facing SMRs

High Costs & Scaling Risks

Critics note that SMRs are being pitched with optimism that underestimates real-world cost escalations. A recent analysis titled “Small Nuclear Reactors Will Not Save The Day” warns that SMRs are being marketed like the iPhone of nuclear energy—clever, scaled down—but may not deliver cost or performance breakthroughs at scale. 

The manufacturing and supply chains remain nascent. Economies of scale may favor larger units until SMR deployment is widespread enough to amortize overheads.

Regulatory & Licensing Hurdles

Even though SMRs promise modularity, each design still faces full regulatory scrutiny, safety review, and licensing. The NRC (in the U.S.) must adapt its frameworks for new reactor forms, which takes time and technical investment.

During a shutdown, regulatory functions such as licensing and inspections stall—delaying SMR deployment schedules. 

Fuel, Waste & Supply Chain Risks

Some SMR designs require advanced fuels or novel materials (e.g., high-assay low-enriched uranium, or HALEU). Ensuring secure, domestic production of such fuels remains a hurdle. In fact, the NNSA and DOE have committed to distributing HALEU to U.S. industry to support near-term demand. 

Waste management—especially for novel reactor types—is still unresolved, complicating life-cycle cost and regulatory acceptability.

Market & Investment Uncertainty

Private investors and utilities may balk at projects with long lead times and uncertain returns. The gap between pilot demonstration and mature deployment is steep. Without clear signals and risk-sharing (e.g., via government loan guarantees or public-private partnerships), many SMR projects may stall.

Public Perception & Political Risk

Though nuclear power is low-carbon, public acceptance continues to be a barrier, especially in areas with strong anti-nuclear sentiment. Moreover, shifts in political leadership or funding priorities can derail momentum.

SMR Developments to Watch

Some real-world signals offer insight into the trajectory:

• In Kansas, TerraPower signed an MOU with Evergy and the state government to pursue SMR deployment, potentially in underground boreholes, signaling efforts to improve safety, surface footprint, and cost structure. 

• Several U.S. companies have been selected for DOE’s Fuel Line Pilot Program, which aims at fast-tracking advanced fuel fabrication capability—a key enabler for SMR and advanced reactor commercialization. 

• DOE’s FY 2026 budget realignment shows serious financial favoring of nuclear (especially SMRs) over many other clean energy priorities, underscoring government belief that nuclear is central to energy security. 

Can SMRs Deliver?

SMRs hold real promise as a flexible, lower-risk pathway to clean baseload power—but only if certain conditions are met:

• Effective regulatory adaptation and expedited licensing paths

• Stable and sufficient financing, with risk mitigation via public tools (like loans, guarantees, or matching funding)

• Mature and scalable manufacturing supply chains

• Secure fuel supply chains (e.g. HALEU readiness)

• Coherent strategy linking infrastructure, grid integration, and waste management

Absent those ingredients, many SMR proposals may remain aspirational pilots rather than utility-scale dispatchable assets.

Part III: Interplay, Tensions & Strategic Outlook

How the NNSA Crisis Impacts the Broader Nuclear Agenda

Though the NNSA is primarily defense and security oriented, its funding and operational health indirectly shape the nuclear energy ecosystem:

1. Budgetary Crowding
   With large shares of DOE support being diverted to defense and weapons modernization, public funding for nuclear energy research (especially advanced or low-carbon reactors) faces tighter competition. 

2. Expertise and Human Capital Flows
   Talented engineers, scientists, and regulatory professionals may be drawn to or dependent on NNSA programs. Instability there can bleed across to energy programs via brain drain or resource shifts.

3. Institutional Credibility & International Cooperation
   The U.S. is a major player in global nuclear safety, nonproliferation, and export control regimes. Funding instability degrades confidence among partner nations in U.S. commitments and may weaken collaboration on clean nuclear deployment abroad.

4. Regulatory & Oversight Infrastructure
   If the NRC and DOE offices lose institutional capacity or funding consistency, their ability to manage the licensing, oversight, and support functions essential to new reactor deployment will be impaired.

A Strategic Crossroads: The Budget, Politics & Timing

The current political dynamics intensify the volatility. The U.S. government shutdown has exposed just how fragile the public funding infrastructure is for nuclear programs. Restarting operations after a prolonged lapse is costly and risky.

Meanwhile, the FY 2026 budget request signals a strategic pivot: while non-defense energy programs are cut deeply, DOE’s lending authority and support for SMR and advanced reactor deployments remain intact. 

This suggests that the federal posture is shifting toward treating nuclear (especially advanced nuclear) as a linchpin of energy and industrial policy. But if funding breakdowns and operational disruptions continue, capacity to execute will be constrained.

Scenarios to Watch

1. Swift Congressional Resolution + Resumption of Operations
   If the shutdown ends quickly and Congress reauthorizes funding, NNSA, NRC, and DOE research operations may largely restart, damage mitigated. But the disruption may still impart lingering caution, delay capital decisions, and raise cost of reactivation.

2. Prolonged Shutdown & Institutional Attrition
   Extended lapse could force deeper cuts, permanent loss of staff, slowing of licensing pipelines, infrastructure deterioration, and a more fundamental shakeout of nuclear capabilities.

3. Policy Re-prioritization with Nuclear Focus
   If leadership doubles down on nuclear, streamlining SMR policy, providing guarantees, and prioritizing regulatory reforms, the momentum behind advanced nuclear deployment may re-assert itself.

4. Market and Technology Disappointment
   If SMR demonstrations falter or cost metrics disappoint, momentum may stall. Without meaningful success stories, capital may shift back to more established technologies (like renewables + storage) or even new options like fusion.

Recommendations for Stakeholders

• Stabilize Core Funding: Congress and the executive branch must protect essential nuclear safety and stewardship functions from shutdown volatility.

• Bridge to SMR Demonstrations: Leverage loan programs, public-private partnerships, and de-risking mechanisms to validate SMR economics and operations at scale.

• Regulatory Modernization: NRC and DOE need proactive reforms to adapt to modular reactors, hybrid fuel forms, and cutting-edge reactor designs.

• Workforce & Institution Investment: Protect institutional memory, provide training pathways, and reduce uncertainty for nuclear professionals.

• Strategic Communication: Build public and political trust by transparently communicating nuclear safety, cost, waste, and deployment strategies.

Conclusion

The current moment for nuclear energy is one of both peril and possibility. The funding crisis enveloping the NNSA—brought on by shutdown pressures, shifting budget priorities, and internal disruptions—threatens the backbone of U.S. nuclear infrastructure. At the same time, advances in small modular reactor (SMR) technology offer a potential path to decarbonization and energy security. But that path is not guaranteed.

Whether the U.S. can manage the operational risks, sustain funding discipline, modernize regulatory systems, and nurture nascent SMR deployment will determine if this is a turning point or a missed opportunity. For observers, policymakers, and industry alike, the months ahead may well decide whether nuclear retains a central role in the clean energy transition—or recedes into the margins.