NuScale Power (NYSE: SMR) specializes in developing small modular nuclear reactors, boasting a significant first-mover advantage in nuclear technology. The stock experienced a remarkable rise over the past year, hitting a peak of $57 per share in October, but has seen a substantial decline recently. Now trading below $15 per share, many investors are wondering: is NuScale Power a worthwhile investment? Let’s explore its future prospects.
The nuclear sector adheres to some of the strictest safety regulations and approval processes. At present, NuScale’s most significant edge is its NuScale Power Module, the only small modular reactor with standard design approval (SDA) from the Nuclear Regulatory Commission (NRC).
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
NuScale currently holds two designs approved by the NRC: one for its 50 MW power module and another for a larger 77 MW module, aimed at cost efficiency. The NRC took 3.5 years to review and approve these designs, granting NuScale a critical first-mover advantage over other developers in the next-gen nuclear reactor space. With its SDA, NuScale has confirmed its safety features, demonstrating that its systems are designed to operate safely without requiring direct operator intervention for cooling.
Investors should monitor potential regulatory changes closely. Notably, the NRC is working on finalizing Part 53, a licensing framework intended for advanced reactors that is more technology-inclusive. This could provide developers with increased flexibility in demonstrating safety and significantly shorten the approval timeline. The final ruling is expected by the end of 2027, although some speculate it could be issued this year.
While NuScale has a distinct advantage in NRC certification, some risks warrant attention, such as the costs associated with its technology and the challenge of securing firm customer commitments. The company’s inaugural project, the Carbon Free Power Project, encountered several cost overruns. To mitigate this risk, NuScale has partnered with ENTRA1, which will assist in the development and financing of its small modular reactor power plants.
This partnership with ENTRA1 alleviates the considerable upfront capital and construction risks for utility providers. ENTRA1 will act as the project developer, managing design, construction, and financing, which allows NuScale to maintain an asset-light business model.
