If you hear the names Chernobyl, Three Mile Island, and Fukushima, you will most likely associate them with nuclear power. But not in a good way, since the notoriety of these names is because of nuclear meltdowns, or near misses.
NuScale Power (SMR -3.23%) is hoping it can change the nuclear power industry for the better by changing the way power plants are built. Not enough people are talking about this company or the nuclear technology change that it is helping develop.
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The "big" problem with nuclear power
Historically, nuclear power plants have been huge capital investment projects. Nuclear reactors have, so far, been site built, meaning that all of the construction basically takes place where the reactor is going to be located. The projects have also been massive, with nuclear power plants often meant to replace large coal or natural gas power plants.
It isn't uncommon for nuclear reactor projects to be delayed and over budget. For example, the most recent nuclear power plant built in the United States, by regulated utility The Southern Company, was seven years late and cost around $17 billion more than expected. Those are not good construction results, even though Southern will now have access to reliable nuclear power for decades into the future.
Given that backdrop, it is understandable that another company building the same style of nuclear power plant at roughly the same time simply gave up when its project manager, Westinghouse, went bankrupt. Southern, by contrast, took on the role of project manager from Westinghouse, which was also overseeing its reactors, so it could keep its power plant construction going.
Needless to say, the nuclear power industry isn't an easy industry in which to operate. And when things go wrong at a large, site-built nuclear power plant, they can go wrong in a massive way, noting the two meltdowns and one near miss highlighted above. That usually earns the entire industry a black eye despite a generally safe operating history for most nuclear power plants.
NuScale is changing the script by going "small"
This is where NuScale Power comes in, given that it is building small scale modular nuclear reactors (SMRs). These reactors are built in a factory, creating a more uniform product that also benefits from the cost efficiencies offered by an assembly line manufacturing approach.
They are small, so they can be easily transported to where they are needed, located more closely to population centers, and adverse events are expected to be easier to contain. In addition, by including the most modern technology, the safety of NuScale's SMRs is expected to be higher than for older reactors.
To be fair, NuScale isn't the only company working on SMR technology. However, it was "the first SMR to receive U.S. Nuclear Regulatory Commission (NRC) design approval." It is currently the only SMR approved by the NRC, which the company believes gives it a bit of a leg up on the competition. But there's another important piece to the puzzle.
NuScale Power is working with RoPower, a Romanian electricity company, as it makes its final go/no go decision on a new nuclear power plant. That plant could end up being powered by six SMRs provided by NuScale Power that will be linked together. NuScale has already ordered parts that have long construction times for the six SMRs this project would require. But it has those same parts on order for another six reactors as well. In other words, the company is ready to hit the ground running.
The company's stock has risen around 200% or so over the past year. Wall Street clearly isn't ignoring the stock. However, with a final decision from RoPower expected sometime in the next year, NuScale Power could quickly change from a good idea to a real business. Notably, the second SMR sale should be much easier to get than the first, since the ice will have been broken. So NuScale Power could turn into a growth story very quickly.
Watch NuScale, even if you don't buy it
Nuclear power and SMRs aren't things that people talk about every day. But SMRs are a potential game-changing technology in the energy sector, with NuScale Power one of the companies leading the way into the future.
If that is interesting to you, and you are a more aggressive investor, you might want to consider buying before the first sale is inked. But even if you aren't interested in buying NuScale, it's worth learning about the huge energy opportunity that SMRs offer the world.
