NuScale Power (SMR 0.42%) is not for the faint of heart, since it is a money-losing start-up. But it has an interesting and fairly well-developed technology in the nuclear power space. If you believe in nuclear power and the promise of small modular reactors, it could be a good, though aggressive, investment option for you.
Here are three reasons you might want to buy the stock like there's no tomorrow.
1. Nuclear power is having a renaissance moment
The core of the story around NuScale Power is really about the attractiveness of nuclear power in general. After the 2011 Fukushima nuclear meltdown, much of the world turned against nuclear power. That's kind of what happens after nuclear meltdowns, which remind people of just how powerful a technology, for good and bad, nuclear power can be.
Image source: Getty Images.
With the Fukushima event in the distant past, however, the world is again focused on the positives of nuclear power. The list includes zero carbon emissions, which is important since there are increasing concerns around global warming. But the clean energy factor is buttressed by the fact that nuclear power provides always-on power, also called baseload power. That makes it a perfect compliment to intermittent clean energy sources like solar and wind.
Before you look at NuScale Power's business, you need to believe in the nuclear power story. If you don't buy the idea that nuclear power could be a huge benefit to the world, you probably shouldn't own NuScale Power, which is basically attempting to advance nuclear power technology.
2. NuScale Power has interesting and well-developed tech
The tech that NuScale Power is working on is called an SMR, which stands for small modular reactor. Essentially, NuScale has taken current nuclear power tech and scaled it down. This changes the dynamics in an important way.
Right now, reactors are huge capital investment projects that are site built and massively time-consuming and expensive to erect. NuScale Power is looking to build smaller reactors that can be fabricated in a factory setting and then transported to where they eventually get used. Smaller may be much, much better in this case.
Smaller reactors will mean reactors can be placed closer to population centers. It will mean each reactor is less costly to build, a fact advanced even further by the use of assembly line production methods. And, as NuScale Power likes to highlight, it has "the first SMR to receive U.S. Nuclear Regulatory Commission (NRC) design approval." In other words, it likely has an important head start on the competition.
If you are excited by nuclear power and believe SMRs are the future, NuScale Power could be a worthwhile investment option.
3. NuScale Power could have its first sale in 2026
Technology isn't enough to build a business -- NuScale Power also needs customers. This is new technology, so the first sale is the biggest one.
Right now, NuScale Power is working with RoPower, a Romanian utility, to assess the potential customer's plans to build a nuclear power plant using NuScale Power's SMRs. The intent is to link six units together to create a larger power plant, another benefit of the modular approach of SMRs. The final green light could come in 2026.
However, NuScale Power is already gearing up for additional sales. It has purchased parts that require long lead times to manufacture for not six, but 12 SMRs. This is probably a good call, since the first sale will be the hardest to nail down. But once it has a customer, it will likely be easier to get the second and third customers to sign on.
If you like nuclear and are excited by SMRs, then you need to keep a close eye on the RoPower deal. If it is inked, it could be a key turning point for NuScale Power's business, effectively turning SMRs from a good idea to a real business opportunity.
NuScale Power is a risky stock
There are good reasons to like the investment opportunity that NuScale Power offers. But there are a lot of moving parts, and there is a lot of uncertainty. You need to have strong convictions here and the fortitude to take on a risky investment. If you do, NuScale Power could be worth loading up on today, since tomorrow it could be busy building the new nuclear technology that increasingly powers the world.
