Where Will NuScale Power Be in 1 Year?

NuScale Power (SMR) sees itself as a leader in the small-scale nuclear reactor (SMR) industry, positioning itself well ahead of its competitors. This has significant implications for investors as the company navigates an important phase in its growth over the coming 12 months.

Even though NuScale is not expected to sell any reactors within this timeframe, there are key developments to watch for those interested in the company's future.

Understanding NuScale Power

Historically, NuScale has focused on research and development with the aim of creating the first commercially operating small modular reactors. These reactors are appealing for several reasons:

First, their smaller size leads to reduced construction costs compared to traditional large nuclear plants. Second, advancements in technology enhance their safety profiles. Lastly, their size allows for installation in areas closer to demand centers, including urban environments and data centers.

The demand for power is anticipated to grow significantly, potentially increasing sixfold in the next two decades compared to the previous 20 years. With the clean energy benefits of nuclear power, SMRs could become increasingly popular in the energy landscape.

Importantly, NuScale’s management believes they are ahead in the race against competitors. The company’s technology aligns with current regulatory standards, setting it apart from rivals that are attempting to innovate from scratch. NuScale has made significant progress with the U.S. Nuclear Regulatory Commission, being the only small modular reactor technology approved by this regulatory body. This certification is a critical advantage, as the typical approval process can take years.

Looking Ahead: What to Expect in the Coming Year

As we move into 2025, the end of the decade is still a few years away. Although investors should manage their expectations regarding short-term financial performance, important transitions are occurring. In 2024, NuScale pivoted from an R&D phase to focusing on commercialization, which is crucial for its growth.

For example, the company successfully managed to reduce its operating expenses by 40% year-over-year in the fourth quarter of 2024. This cost-cutting trend may continue, positively influencing the company's financial health.

In terms of finances, NuScale converted warrants at the end of 2024, leading to a bump in share count but providing a cash boost of around $200 million. This infusion can give the company some leeway on its balance sheet, though monitoring cash flow will remain essential.

Currently, NuScale has foundational plans for six reactors, with discussions and confidence leading them to order components for an additional six. However, while they have a contractual arrangement for the initial six reactors, no contracts are finalized for the next batch, which means the company is investing ahead of confirmed demand.

Key upcoming events to watch include potential regulatory approvals for the company’s upgraded reactor technologies in mid-2025, and, more critically, the final investment decision regarding a power plant in Romania that is set to house NuScale's first six reactors. This decision is expected by the end of 2025 and could be pivotal for the company’s trajectory.

Execution is Crucial

The next 12 months will be crucial in determining if NuScale Power has a commercially viable idea or if it remains just a good concept. Effective execution will be necessary across multiple fronts. If successful, NuScale could solidify its position as the foremost player in the SMR market, thus gaining a significant advantage over its competitors.

Investing in this high-risk stock should be approached with caution. Various factors could lead to setbacks, including unforeseen cash flow issues, delays in regulatory approvals, or challenges with the Romanian project’s final approval.

NuScale, SMR, nuclear