Where will NuScale Power be in 1 year?

NuScale Power (SMR 11.34%) seeks to mass produce small-scale modular nuclear reactors. It would be a major step before nuclear power had such a product. But building any nuclear power plant, large or small, is a complex task and highly regulated by the government. NuScale’s next big hurdle to the finish line will come in mid-2025.

NuScale Power operates in a challenging industry

The name Chernobyl still conjures up frightening images because of the nuclear power plant meltdown that occurred there in 1986, more than three decades ago. Fukushima is a more recent example of the dangers of nuclear power thanks to the crisis that occurred in that Japanese city in 2011. Even Three Mile Island, while not actually at the point of collapse, still raises eyebrows even though it happened in 1979 .

Image source: Getty Images.

The fear of a nuclear crisis and its aftermath has left the nuclear industry with huge hurdles to overcome as it seeks to build new power plants. The latest large-scale nuclear power plants built in the United States, Units 3 and 4 at the American utility giant southVogtle nuclear power plant, were billions of dollars over budget and well behind schedule when both were finally attached to the grid in early 2024.

To suggest that building a nuclear power plant is difficult would be a vast understatement. In fact, figuring out the technology component might actually be the easiest part of the process. NuScale Power has done this. The hard part is getting the idea approved and then building the factory. That’s the background investors need to understand when looking at NuScale Power and its plans to efficiently manufacture small-scale modular nuclear reactors.

NuScale is the only one, but it doesn’t exist yet

NuScale likes to point out that it has “the only US Nuclear Regulatory Commission-certified SMR.” This is a pretty compelling statement because it speaks to the progress the company has made in trying to have a product they can sell. But there was another important tidbit contained in the company’s second quarter 2024 earnings release: “The standard design approval application under review by the US Nuclear Regulatory Commission and remains on track for completion in mid-2025, as scheduled.”

So despite having some approvals, NuScale still doesn’t have all the approvals it needs. The next big hurdle won’t be here until mid-2025. That means NuScale still can’t build the product it wants to sell, and won’t know if it can keep moving forward until the U.S. Nuclear Regulatory Commission makes its decision. It wouldn’t be fair to suggest that NuScale is doing nothing, but there’s only so much it can do with its small-scale modular-nuclear reactors until it clears the next hurdle.

The reason this is so important is that NuScale’s balance sheet has $130 million in cash. But as its earnings statement points out, it lost nearly $28 million in Q2. While NuScale has enough cash to continue and actually generates some revenue to support its spending and investment needs, the business cannot continue indefinitely. Much rests on the outcome of the 2025 decision.

A big risk, despite solid progress

It wouldn’t be fair to suggest that NuScale Power is a bad company; it’s just not true. In fact, it achieved huge success. But they still need to do more before they can build and sell a product. The company and investors will learn whether it can continue to move forward during the year or whether it needs to go back to the drawing board and make changes when the US Nuclear Regulatory Commission announces its decision. If you’re watching NuScale Power, you’ll probably want to mark your calendar, as a lot is riding on a positive outcome from the ongoing regulatory review.