LONDON, May 8 (Reuters) - Britain is investing almost

200 million pounds ($251.14 million) to build Europe's first

facility to produce high-assay, low-enriched uranium (HALEU), a

fuel it says will be needed to power the next generation of

nuclear energy projects, the government said on Wednesday.

As part of efforts to meet climate targets and boost energy

security, Britain is seeking to increase its nuclear power

capacity by 2050 to 24 gigawatts, equivalent to about a quarter

of projected electricity demand, from about 14% today. It hopes

to build new advanced reactors which could need the HALEU fuel.

"As we see more advanced modular reactors coming onstream,

HALEU will be the fuel that will be required so having more of

that technology in the UK will mean we are able to supply them

from a domestic source," Andrew Bowie, Britain's minister for

nuclear and renewables said in an interview.

Britain is awarding uranium enrichment firm Urenco 196

million pounds to build the facility in Cheshire, Northwest

England, which will support around 400 jobs. It will be ready to

produce the fuel by 2031 to be used domestically or exported,

the Department for Energy Security and Net Zero said.

"There are obviously opportunities to export this fuel to

our allies who themselves want to wean themselves away from an

over reliance on Russia for their nuclear fuel," Bowie said.

Many firms globally developing advanced nuclear reactors

are relying on HALEU to fuel them but the main company currently

selling commercial shipments of the fuel is TENEX, part of

Russia's state-owned energy company Rosatom.

Since Russia's invasion of Ukraine the west has been seeking

to reduce its energy imports from Russia.

U.S. firm Centrus Energy ( LEU ) has also begun producing

small amounts of the fuel and expects to scale up production

while France's Orano is considering building a facility in the

U.S.

HALEU is enriched to levels of up to 20%, rather than around

5% for the uranium that powers most existing nuclear plants.

Britain also on Wednesday announced a competition for up to

600 million pounds in contracts to build the world's first

commercially viable fusion power station prototype which it

hopes to have connected to the power grid by 2040.

Scientists, governments and companies globally, including in

the U.S. and Japan, have been trying for years to harness

fusion, the nuclear reaction that powers the sun, to produce

emission-free electricity that does not create large amounts of

long-lasting radioactive waste.

($1 = 0.7964 pounds)