NuScale Power (SMR) has recently captured the attention of investors as its stock surged following Amazon’s announcement to utilize small modular reactor (SMR) technology for its AI data centers. Currently trading around $11.40, the stock has experienced a downturn of approximately 27% year-to-date, but the recent developments are prompting a closer watch on the company’s trajectory this summer.
The excitement around NuScale was palpable last week when trading volume spiked to 30.2 million shares on the day of the Amazon news, significantly above its average of 28.9 million. This surge reflects the rapid shifts in sentiment within the market.
However, a more substantial catalyst may be approaching from Eastern Europe. Earlier this year, Romania’s Minister of Energy announced a Final Investment Decision in February for NuScale’s ambitious 462-megawatt SMR project in Doicești. This project aims to replace 600 MW of coal capacity with clean, stable energy through the deployment of six NuScale modules.
While this decision marks a significant milestone for NuScale, the focus now shifts to financing. Romanian Prime Minister Ilie Bolojan has estimated the construction cost to be up to $7 billion, and while he expressed caution regarding the timing of investments due to the complexity of such projects, Romania’s energy minister indicated that financing could be secured within approximately six months from mid-February. This places a potential announcement around late August, which could be pivotal for the company’s future.
Adding to the narrative, Bank of America reinstated coverage of NuScale on May 22, issuing a Neutral rating along with a $12 price target. The analysts acknowledged NuScale’s unique position as the only SMR developer with U.S. Nuclear Regulatory Commission Standard Design Approval, which provides it a competitive edge over its peers. However, they also noted challenges in the current revenue model, which still relies heavily on service contracts rather than actual reactor construction, with the first reactor not expected to go online until the early 2030s.
NuScale’s ability to convert signed agreements into binding contracts has been slower than anticipated, and this is a crucial metric to monitor. The company has a pipeline of potential projects, including a 6-gigawatt agreement with ENTRA1 and the Tennessee Valley Authority, and the success in finalizing these agreements could significantly impact its market position.
The case for SMRs is compelling: they promise faster and more cost-effective construction compared to traditional nuclear plants, and their modular nature allows for capacity to be expanded over time. In 2023, NuScale became the first U.S. firm to receive NRC Standard Design Approval for an SMR, a significant regulatory achievement that positions it ahead of competitors.
With the stock’s 52-week range fluctuating between $8.85 and $57.42, the volatility reflects the rapid changes in investor sentiment over the past year. As the summer progresses, all eyes will be on Romania’s financing developments. If the funding is secured as projected, NuScale could solidify its standing with one of its most substantial pipeline projects fully funded and approved.
