NuScale Power (SMR 5.13%) and its shareholders just got some very good news. However, investors need to take the news with a grain of salt. Here's what you need to know about Europe's first nuclear power plant set to use NuScale Power's small modular reactors (SMRs).
What does NuScale Power do?
To date, NuScale Power's revenues have been tied to services it is providing to Fluor (FLR 2.65%). Fluor is a construction company working with RoPower, a Romanian power company, on a nuclear power plant. NuScale is acting as a consultant, basically helping RoPower prove that the plant it wants to build is a good idea.
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NuScale's real business, however, is building small modular nuclear reactors. It has approved plans for an SMR, but it hasn't actually built and sold one for commercial use. RoPower's plan is to link six of NuScale's SMRs to create one large nuclear power plant. The good news is that RoPower has decided to move forward with its power plant. That means that NuScale could finally have its first customer.
NuScale Power still hasn't sold any SMRs
The fly in the ointment, and one that has been known from the start, is that RoPower's investment decision is just the first step. RoPower now has to find the money to build the power plant it envisions. If it can't do that, then NuScale's good news will be a bust. It could take six months or more to line up financing.
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Key Data Points
Until RoPower actually has the financing, NuScale Power's business model remains up in the air. Even if you assume RoPower can raise the funds it needs, NuScale Power's ability to scale up and deliver an SMR remains untested. Moreover, the company will likely remain unprofitable for much longer, given the investment that will likely be needed to start the manufacturing process. At the end of 2025, NuScale Power estimated it had liquidity of roughly $1.3 billion, so it has plenty of cash on hand right now. The real issue to watch is execution.
NuScale Power's big test is the first SMR
At the end of the day, the big hurdle that NuScale Power has to overcome is delivering the first SMR. And that SMR needs to work as expected. Only then will its technology be proven, which could open the door for more commercial customers. Until that point, NuScale Power is just a company with an exciting idea. Despite the good news, only the most aggressive investors should consider NuScale Power.
