NuScale Power [NYSE:SMR], the nation’s most mature purveyor of small modular nuclear power plants, has lost its only valid customer, raising doubts about the Oregon company’s continued existence. The company announced Wednesday (Nov. 8) that Utah Associated Municipal Power Systems (UAMPS) has cancelled its contract for the “Carbon Free Power Project” after being unable to attract enough cities in the joint action agency’s territory to participate.
The UAMPS project, years in development, would have seen construction of six of NuScale’s 77-MW small pressurized water nuclear reactors, generating some 462 MW of power. The project has seen the price tag of its power output climbing over the years, from an initial quote of $59/MWh to $89/MWh. That led some of the initial cities that agreed to buy the power to back out and the project failed to attract new participants. Originally scheduled to come online in 2026, the target date had slipped to 2029.
Fortune magazine quoted NuScale CEO John Hopkins, “Once you’re on a dead horse, you dismount quickly. That’s where we are here.”
NuScale has received substantial federal government support for its small modular reactors. That has included some $200 million in Energy Department funding and a $1.4 billion cost sharing agreement with DOE. The site for the UAMPS project would have been on land that is part of DOE’s Idaho National Laboratory, historically the site of federal government nuclear reactor research and development going back to 1949.
In another development, the U.S. Nuclear Regulatory Commission continues to have questions about NuScale’s design for its reactors. NuScale often offers a misleading statement that its paper reactor is the “first and only SMR to have its design certified by the U.S. Nuclear Regulatory Commission.” The NRC signed off on the design for NuScale’s first generation reactor, a 50-MW machine. When NuScale upped the capacity, the regulators launched a new inquiry into the importance of the changes, including the impact of the upgrade on the steam generators.
The NRC staff reviewing the design changes met with NuScale officials on Tuesday (Nov. 7) to go over outstanding issues. NRC’s schedule for the review predicts a final safety evaluation report and a decision on a final standard design approval for July 2025. Edwin Lyman, who follows nuclear safety issues for the Union of Concerned Scientists commented on X, “Looks like the number of new technical issues arising is increasing at about the same rate as the number of issues being resolved.”
NuScale last month announced a deal with a company, Standard Power, which aims to operate data centers for computationally voracious cryptocurrency mining. The deal, which NuScale said would be for a total of 24 of NuScale’s 77-MW reactors, 12 in each of two sites, over 1,800 MW in total, raised a lot of eyebrows. The deal appears to be aspirational, not contractual. No terms and no money were described in either company statements or Securities and Exchange Commission filings.
That deal and NuScale’s well-known troubles with its UAMPS project led a noted short seller, Iceberg Research, to issue a devastating analysis of the SMR maker soon after the announced deal with Standard Power. The report was headlined, “A Fake Customer and a Major Contract in Peril Cast Doubt on Nuscale’s Viability.” On Aug. 24, 2022, NuScale shares were trading at $15.34. On Aug. 24, 2023, the shares had fallen to $5.82. When the market closed yesterday (Nov. 9), the shares were trading at $1.02 per share.
On the investment web site Seeking Alpha the day before the UAMPS announcement, analyst Alessandro Calvo wrote, “After a careful analysis of the company, its financials, its technology, and its future prospects, my rating is a firm STRONG SELL. Not only is it a company that is burning a worrying amount of cash in the short term, but I also believe that in the long term it is developing a non-competitive technology with little potential.”
Calvo’s bottom line on NuScale: “Existing contracts with clients are unlikely to be successful, raising doubts about the company’s future prospects.”
–Kennedy Maize