NuScale Power (SMR 3.54%) is a story stock right now. It has very real and exciting nuclear power technology to sell, but it hasn't yet built and sold any of its small modular nuclear reactors (SMRs). This is the big fact that investors need to wrap their heads around before buying the stock.
However, Wall Street is forward looking, so what could happen over the next 12 months? Maybe not as much as you might hope.
NuScale Power has big opportunities
NuScale Power has regulatory-approved plans for a small modular nuclear reactor. There are companies working on SMRs that use a different fuel source and technology than current large nuclear reactors. Those could be years away from entering the market. NuScale Power has taken existing fuel options and downsized current nuclear power plant technology, leading to a quicker approval process.
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There are many benefits to shrinking a nuclear reactor. For starters, SMRs can be built in a factory setting, which should enable assembly line processes. That should result in lower costs and more consistency. At the very least, a factory setting will eliminate the headaches that come with the construction of large capital investment projects built on site.
There is also the size benefit of being able to place an SMR closer to where it is needed. It isn't hard to imagine a data center running AI applications -- which require a lot of reliable electricity -- that has an SMR on site. And because SMRs are small, they can be placed closer to population centers. So that data center could be right next to a city without becoming a drain on the local power grid.
The business opportunity for NuScale Power is exciting. There's just one problem: It still hasn't closed a sale, so the technology is still untested.
NuScale has irons in the fire
It isn't that the company hasn't been trying to finalize a sale. It has a potential sale lined up in Romania, and if that deal is consummated, the local utility RoPower will purchase six NuScale Power SMRs. They would be linked up to create one large nuclear power plant. NuScale is serving as a consultant to the engineering company Fluor and RoPower as the utility considers whether to move ahead with the plan.
This is a major capital investment for the Romanian utility, and it is taking longer than expected to make the final decision. Even if the answer is yes, there is still the issue of finding the cash to pay for the project. That could still scuttle the project even if RoPower wanted to build it. At this point, an answer isn't expected until late 2026 or early 2027.
The positive piece of the RoPower puzzle is that NuScale Power's consulting work allows the money-losing start-up to generate some revenue. But a sealed deal would still be much better.
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NuScale is already gearing up for its first sale, having ordered parts that require long lead times for up to 12 SMRs. If the RoPower deal falls through, that could be a problem. This is why it is also working with the Tennessee Valley Authority (TVA) and the independent energy production company ENTRA1 Energy, with the hope of getting its SMRs into U.S.-based nuclear power projects.
That's promising, too, but there's still no final sale. In this case, NuScale Power has only outlined the milestones it has set. Those milestones don't actually come with hard dates or guarantees. So there's no way to determine when, or even if, the TVA and ENTRA1 become actual customers.
You probably shouldn't rush into NuScale Power
News flow appears to be what's driving NuScale Power's stock today, given that the company still doesn't have a first SMR sale. And it seems unlikely that one will be announced in the next year.
Even if a sale is get announced, NuScale Power is really setting itself up to be a manufacturer. Waiting until the company's product has proved reliable may mean missing out on early gains, but the long-term opportunity really lies in the widespread adoption of SMRs. That would be a multi-year, if not multi-decade, opportunity.
