On Tuesday, the U.S. government, led by President Biden, unveiled a roadmap aimed at advancing the nuclear energy industry, with plans to triple the country’s nuclear power capacity by 2050. The initiative specifically highlights the development of Small Modular Reactors (SMRs) and industry leader NuScale Power (stock symbol: SMR) as a key technology provider. Following this positive news, NuScale’s stock surged on Wednesday.
NuScale Power’s stock jumped 14.8% during trading on Wednesday, reaching a 52-week high of $26.67. This month, the stock has increased by 38.6%, building on a substantial 65% rise in October.
As a reliable, carbon-free energy source, demand for nuclear power is rising, and the U.S. is eager to keep pace. According to the roadmap announced, the U.S. is set to deploy an additional 200 GW of nuclear power capacity by mid-century through the construction of new reactors, the reopening of closed plants, and upgrades to existing facilities. The near-term goal is to deploy 35 GW of new capacity by 2035, with an annual increase of 15 GW by 2040.
The current administration believes that expanding nuclear capacity will create numerous job opportunities, strengthen domestic supply chains, enhance energy reliability, and support the government’s goal of achieving a net-zero emissions economy by 2050.
The plan includes support for the development of Small Modular Reactors (SMRs), which is NuScale Power’s area of expertise. NuScale is working on advanced, scalable SMRs that promise reliable, low-cost, and carbon-free electricity. The high costs associated with traditional large nuclear plants and the challenges of their siting and construction have limited growth in the sector. In contrast, SMRs are about one-tenth to one-fourth the size of conventional nuclear power plants, resulting in lower construction costs and easier deployment.
The White House’s plan specifically mentions NuScale Power, emphasizing that the Nuclear Regulatory Commission (NRC) is reforming the licensing and approval processes for new reactors and gaining valuable insights during the evaluations of companies like NuScale. Notably, NuScale’s SMR design was the first to receive NRC certification.
The U.S. Department of Energy is expected to allocate $900 million for SMR development. NuScale had previously received cost-sharing awards from the department, suggesting it may benefit significantly from this funding.
It’s important to highlight that despite a recent downturn in clean energy stocks—driven by market concerns over the potential repeal of the Inflation Reduction Act by a Trump presidency—investors anticipate substantial bipartisan support for the nuclear industry. Major tech companies are also investing in SMR technology, indicating that Biden’s nuclear development initiative is unlikely to be adversely affected if Trump were to take office. Nuclear energy currently accounts for nearly 20% of the U.S. electricity mix, comparable to electricity generated from renewable sources like wind and solar.
SMRs have significant growth potential, and NuScale Power is currently well-capitalized, reporting a reduction in third-quarter losses. However, it is noted that NuScale’s “VYOGR” SMR plant is still several years away from commercialization, with the company’s market capitalization nearing $2.6 billion. Investors should carefully consider the inherent risks and their risk tolerance before making investment decisions.
