Lockheed Takes the Lead in the Race for a Nuclear Spaceship

The U.S. military likes nuclear power -- and I mean, it really likes nuclear power.

Powered by highly enriched uranium nuclear reactors, U.S. Navy submarines and aircraft carriers can operate for as long as 30 years before needing to add fuel. This frees them from the need to have oil tankers tag along on missions for periodic refueling. It allows the submarines to operate underwater without the need to come up for air for the combustion of hydrocarbons. For that matter, not needing to burn hydrocarbons helps the military burnish its environmental credentials as a user of green energy.

Given all these advantages, therefore, it should perhaps come as no surprise that the Pentagon would also like to put nuclear power in its spaceships. The big surprise is that 65 years after America launched its first satellite, we're finally making progress toward building nuclear-powered spaceships.

And Lockheed Martin (LMT -0.75%) is leading the way.

Lockheed goes nuclear

Several months ago, if you recall, I wrote about the DRACO spaceship that NASA and DARPA -- the Defense Advanced Research Projects Agency -- were building. For $499 million, Lockheed Martin would build a small craft to test nuclear-powered spaceflight in Earth orbit, and its partner BWX Technologies (BWXT 1.37%) would build a high-assay low-enriched uranium (HALEU) nuclear engine and provide the fuel to power it.

The DRACO project is expected to launch in late 2025 or early 2026 and begin testing in 2027. Before this project has even gotten off the ground, however, it turns out that Lockheed is already working on another nuclear spaceship project.

As SpaceNews reported last month, the U.S. Air Force Research Lab has hired Lockheed Martin, along with Intuitive Machines and Westinghouse Government Services, to design and build a different kind of space nuclear reactor to extend the lives of satellites in orbit.

Meet (George) JETSON

Dubbed the Joint Emergent Technology Supplying On-orbit Nuclear Power -- "JETSON" -- project, this is a relatively small bet on nuclear power's potential in space. In total, AFRL is doling out only $60 million -- $33.7 million for Lockheed, and a bit less than that split between Intuitive Machines and Westinghouse.

Intuitive Machines' role will be to design a spacecraft to house the JETSON reactor. Westinghouse will design and build a nuclear fission system (i.e., the power plant). Lockheed's role appears to be that of overall general contractor on the project, bringing Intuitive's and Westinghouse's contributions together, getting them ready for a "preliminary design review," and guiding the project all the way through "critical design review."

Which explains why the JETSON contract is so much smaller than the DRACO project earlier this year. Whereas DRACO involves the actual building and testing of a nuclear-powered spaceship, for the time being, all Lockheed Martin and its partners are being asked to do is prepare plans to build one.

Getting the band back together

Interestingly, this isn't the first time these three companies have worked together.

In June of last year, if you recall, NASA and the U.S. Department of Energy awarded a total of $15 million to these same three companies (plus a few other partners working with them) to draw up plans for a 40-kilowatt mini nuclear power plant. As the government explained at the time, that would be enough electricity to power about 30 average American homes...or one lunar outpost, once Project Artemis gets around to building one on the moon.

What it means to investors

Admittedly, $15 million, $60 million -- even $499 million -- all of these may seem like piddling sums to a defense contracting behemoth like Lockheed Martin, which pulled in nearly $66 billion in revenue last year, according to data from S&P Global Market Intelligence. The question may arise: Should even space investors give any attention to contracts this small?

I'd argue the answer is yes. Remember, even the $499 million DRACO construction contract began in 2021 with a trio of DARPA contracts valued at less than $28 million combined. Just two years later, as construction of DRACO begins, the contract size has swelled roughly 18 times that size. If the JETSON contract follows a similar course as it transitions from planning to construction, its value could easily eclipse $1 billion -- a material sum even for a giant like Lockheed.

And again, that's the price to build just one single spacecraft, and a small spacecraft at that. Assuming all goes well and nuclear propulsion proves a viable option for spacecraft, further contracts can be expected, generating even more money for Lockheed Martin.

This, I'd argue, is one segment of the space business that is worth keeping an eye on.