NuScale Power (SMR 2.91%) is trying to change how we generate nuclear energy. In simplest terms, it's building small nuclear reactors -- essentially mini power plants -- that can be mass-produced in factories and delivered to remote sites. These reactors are designed to be scalable (you can use one or 12, depending on your power needs). Their flexibility makes them ideal for facilities that need large amounts of reliable power, like data centers.
If NuScale can succeed, it could usher in an era in which nuclear reactors are more widely used, perhaps even powering entire cities safely with no greenhouse gases. That scenario would make its current market cap -- about $6 billion -- seem cheap in comparison. It could also generate a life-changing amount of wealth for early investors.
Of course, that's not the world NuScale finds itself in today. Not even close. And the gap between its current reality and ideal future helps explain why the stock is still trading more than 60% below its 52-week high. All things considered, can NuScale grow into that future? Let's take a look.
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A compelling idea, with plenty of obstacles ahead
NuScale's future rests on three things. It needs to convert interest in its technology into orders, it needs to deliver its first project, and it needs to prove that its power can compete with other energy solutions. The first is a troubling hole in its business. NuScale remains the only U.S. company with an NRC approval for a small modular reactor (SMR) design. This gives it a head start over competitors like Oklo and Nano Nuclear Energy. But it hasn't translated into business yet.
NuScale has not deployed an SMR for commercial use. It does have some projects in the works, however. For example, it's been working with Romanian partners to deploy an SMR plant in Romania. And it's also partnered with ENTRA1 Energy and the Tennessee Valley Authority (TVA) to deploy SMR technology across TVA's service region in seven states. That would be truly groundbreaking for NuScale if it happened. But it hasn't happened yet.
Perhaps part of the reason NuScale hasn't inked a major deal yet is the uncertainty surrounding construction costs. In fact, this was the main reason its first project with the Utah Associated Municipal Power Systems -- the Carbon Free Power Project (CFPP) -- was ultimately canceled in late 2023. That project would have seen six reactors deployed and launched by 2030, but construction costs rose sharply due to inflation and higher interest rates, making its price for power less competitive than solar and wind.
NYSE: SMR
Key Data Points
Now, hear me out: I think NuScale can sell its SMR technology. And I think it has potential to scale. But it's not going to happen overnight, and investors should expect hiccups and setbacks along the way. So, could NuScale set you up for life?
If we're talking a decade or so, then it has the potential to substantially increase the value of your portfolio. But investors should understand what they're buying: a company with a good idea but no track record to show that it works. The growth stock, then, is a high-risk, high-reward investment. It could set you up for life. Or it could fade into the background.
