Should Investors Consider Purchasing NuScale Power's Shares at This Moment?
Revolutionizing energy landscapes, machine learning and AI are reshaping industries while stoking energy demands from data centers. Amid this tech-driven surge, nuclear power is regaining favor. A dependable, clean energy source, nuclear power is gaining traction as countries strive to reduce carbon emissions, committing to triple nuclear energy capacity by 2050 – the Declaration to Triple Nuclear Energy.
Upcoming heavyweights in finance, including Bank of America and Goldman Sachs, are backing this green transition with their unwavering support for nuclear energy's power generation potential. Small modular reactors (SMRs), a groundbreaking enhancement in nuclear energy technology, are piquing investor interest. At the forefront of this movement is NuScale Power (SMR -19.41%), a trailblazing company capitalizing on growing demand for clean energy.
Data centers and tech giants, such as Alphabet and Amazon, are grappling with carbon neutrality goals and surging energy needs, driving them to seek nuclear energy solutions. In October, they pledged investments in SMR start-ups, laying the groundwork for potential energy solutions tailored to each company's specific requirements, eventually leading to time and cost savings.
NuScale commands an advantageous position with its 50-megawatt electric (MWe) SMR, securing a Standard Design Approval from the U.S. Nuclear Regulatory Commission. The company's unrelenting pursuit has propelled it to the vanguard of SMR development in the U.S.
Nonetheless, prospective investors should be mindful that the deployment of SMR technology is still years away. NuScale has upsized its SMR from 50 to 77 MWe, expecting NRC approval by July 2025. Following approval, it may take a couple more years to achieve full certification.
NuScale's financial trajectory presents challenges, as it underwent significant cost escalations in projects from its 2015 agreement with Utality Associated Municipal Power System (UAMPS) to 2023's cancellation, with project costs surging from $3 billion to $9.3 billion and a mirrored reduction in projected goals.
However, NuScale's recent agreement with Standard Power to develop two facilities in Ohio and Pennsylvania, powered by its 77 MWe SMR technology, aims for early-2029 operation. The facilities, boasting 24 units of 77 MWe SMR modules, represent a full-scale attempt to incorporate this still-emerging technology into operational utilities.
Given NuScale's breakthrough approaches to nuclear power and its capacity for industrial-scale energy supply, is it a worthwhile investment? As of now, NuScale Power is pre-revenue, and investors will need patience to see ROI. Regulatory approvals and construction timelines, coupled with the potential impact of cost escalations, require gamble takers with a long-term vision.
NuScale remains a speculative "story stock," driven by optimism surrounding nuclear energy potential. Given its non-profit generation and liabilities, the stock is susceptible to volatility. While weaving these complex corporate intricacies indeed suggests an exciting and potentially profitable venture, precise investment decisions should depend on evaluation from long-term investors.
Investors looking to capitalize on the growing interest in nuclear energy for clean power generation might consider investing in companies like NuScale Power. Despite facing challenges in cost escalations and regulatory approvals, NuScale's recent deal with Standard Power for two SMR facilities in Ohio and Pennsylvania indicates potential for early operation in 2029.
With financial support from major players in finance such as Bank of America and Goldman Sachs, investing in nuclear energy, specifically in companies developing SMR technology, could potentially yield returns as countries prioritize reducing carbon emissions and boosting nuclear energy capacity.
