Nuclear power is on the brink of a transformation, thanks to the development of small modular reactors (SMRs). These innovative designs aim to make nuclear plants smaller, simpler, and easier to construct, which could play a crucial role in the shift away from fossil fuels. With the demand for clean electricity rising, driven by advancements in artificial intelligence, manufacturing, and electric vehicles, SMRs are gaining attention as a promising solution.
What makes SMRs unique is their small size, 300 megawatts or less power capacity, about a third of the size of traditional reactors. The goal is to build them like an assembly line, with parts made in factories and then put together on-site. However, there are still major challenges in getting the first SMR up and running in the U.S., and they likely won’t be commercially available until the 2030s.
But that didn’t stop the nuclear companies from being bullish, and NuScale Power Corporation (SMR) is one of the companies developing this technology. Shares of SMR have rallied 119.3% over the past six months. Moreover, this hot nuclear stock is up more than 215% this year. But is this surge sustainable? Let’s find out.
NuScale Is at the Forefront of SMR Technology
With over $1.8 billion invested since 2007, NuScale’s reactors are designed to generate up to 77 megawatts of electricity per module. These modules can be combined, allowing a single plant to produce as much as 924 MW. What makes this design stand out is its flexibility; the reactors are pre-fabricated, transported, and assembled on-site, significantly cutting down both construction time and costs.
These reactors are incredibly versatile, making them ideal for powering remote areas, industrial plants, or energy-intensive data centers, which are expected to account for 8% of U.S. power demand by 2030. As companies strive to meet carbon-neutral goals, SMRs could play a key role in reducing reliance on fossil fuels while delivering the efficiency of nuclear power.
NuScale’s technology has certainly attracted attention. Last year, Standard Power announced plans to build two SMR-powered facilities in Ohio and Pennsylvania, aiming to generate 2 gigawatts of clean energy for local data centers (expected to be operational by 2029).
However, it’s not all smooth sailing for NuScale. A major project to deploy SMRs in Idaho was canceled after inflation and rising interest rates caused costs to skyrocket from $5 billion to $9 billion. This led to the Utah Associated Municipal Power System (UAMPS) pulling the plug on the Carbon Free Power Project, which had been in the works since 2015. Initially estimated at $3 billion, the project’s costs ballooned to $9.3 billion by 2023, making it too expensive to continue. As a result, NuScale had to take a $50 million charge.
On the regulatory side, NuScale is proud to be the only company with a Standard Design Approval from the Nuclear Regulatory Commission. However, this approval covers its older 50 MWe reactors, not the current 77 MWe models, which the company expects to be approved by July 2025.
Despite the Carbon Free Power Project setback, NuScale’s President and CEO, John Hopkins, remains optimistic. During the Q3 earnings call, Hopkins emphasized that the company is focused on deploying its SMR modules and is “poised to expand into new markets, applications, and capabilities.”
He also highlighted upcoming projects, such as plans to develop two VOYGR-12 power plants, providing nearly 2 GW of clean energy to power data centers in Ohio and Pennsylvania. This green light pave signals a big step toward commercializing NuScale’s cutting-edge technology. Moreover, with agreements to deploy its reactors in key international markets, NuScale is set for solid growth as global demand for clean, reliable energy rises.
Should You Invest in NuScale Power Right Now?
While NuScale Power shows a lot of promise, it’s important to remember that the company is still in its early stages and not yet profitable. Over the past three years, NuScale has heavily invested in research and development to bring its small modular reactors (SMRs) to market. In the last 12 months, the company reported a net loss of $82 million, with a quarterly cash burn rate estimated at $20 million.
For the second quarter (ended June 30, 2024), SMR posted nearly $1 million in revenue but a significant net loss of $74.44 million, compared to $5.79 million in revenue and a $29.73 million loss during the same period last year. Its loss from operations also stood at $41.88 million, down from $56.12 million recorded in the prior year’s quarter.
The company holds $130.93 million in cash, enough to last about six quarters. However, if it continues losing money, it may need to raise capital through debt or equity, which could dilute existing shareholders.
On the bright side, governments worldwide are increasingly prioritizing clean energy, and NuScale could stand to benefit from rising investments in nuclear power. With its stock trading at $10, it might seem like an attractive entry point for investors hoping to ride the clean energy wave.
However, it’s important to stay cautious. While deals like the one with Standard Power are promising, they are still potential contracts, and things can change, as seen with the terminated UAMPS deal. Plus, NuScale is still quite far from being commercially operational and awaits approval for its updated reactors. Given the uncertain path to profitability, it could be wise for investors to keep an eye on this stock and see how the story unfolds before jumping in.
