NuScale Power (SMR +0.35%) stock has huge potential. Interest in nuclear energy is skyrocketing thanks to soaring energy demand from artificial intelligence (AI) companies, which in turn rely on energy-intensive data center infrastructure. In the coming years, trillions of dollars will be spent scaling additional data center infrastructure, adding ever more demand for clear, reliable energy sources like nuclear.
NuScale is taking a novel approach to nuclear. Instead of building massive power plants -- what experts typically call conventional nuclear power plants -- NuScale specializes in small modular reactors, or SMRs. SMRs are quicker and cheaper to build, meaning they can meet AI's rising energy demands more immediately than conventional plants. And because SMRs are modular, they can be added to in the future, meaning their small initial size isn't a permanent limiting factor for energy generation capacity.
In 2023, NuScale became the first company in the U.S. to have an SMR design approved for construction. Afterward, the company signed a major deal with ENTRA1 and the Tennessee Valley Authority for a 6-gigawatt SMR system to serve the eastern U.S. But the company also has projects abroad, such as its 462-megawatt project in Romania.
The Romanian project has faced execution hurdles, but investors have recently received a slew of positive updates -- news that could transform NuScale stock by the end of the summer. Here's what to watch for in the coming months.
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Here's why NuScale Power could receive a sizable boost this summer
On Feb. 13, NuScale received positive news regarding its Romanian SMR project. "The Final Investment Decision for the SMR project in Doicești marks the transition from the analysis phase to the implementation phase, consolidating Romania's position at the forefront of the new European nuclear industry," Romania's minister of energy announced. "We are replacing 600 MW from a former [coal] thermal power plant with 462 MW of clean, stable, and predictable energy."
In a nutshell, this announcement meant that the Romanian project was cleared by regulators to move forward. The next step was to gain clarity around financing. Romanian Prime Minister Ilie Bolojan previously estimated that it would cost up to $7 billion to build all six NuScale SMR modules, and that time would be needed to arrange a funding plan.
"The investment will be made once a funding formula will be found," he cautioned. "Given the very large amount of money, the complexity of such projects and the technology being in early days, I estimate we will not see the investment immediately."
Image source: Getty Images.
Here's the good news: When the Final Investment Decision was announced in mid-February, Romania's minister of energy commented that the financing phase will take roughly "six months." And while this timeline could be extended, that would put a potential financing announcement sometime in mid to late August. That means one of the larger projects in NuScale's pipeline could have government approval and financing secured by the end of this summer.
