NuScale Power’s small modular reactor (SMR) technology reimagines nuclear energy deployment.
It has partnered with ENTRA1 to commercialize its power modules and provide baseload power to high-demand industries such as data centers and manufacturing.
The agreement with ENTRA1 could help it scale, but it would also dilute existing shareholders.
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NuScale Power’s (NYSE: SMR) small modular reactor (SMR) technology could revolutionize the way nuclear energy is deployed. With their modular design, its power modules can be factory-built and transported to sites, significantly reducing construction time and costs. Each self-contained unit operates independently, allowing utilities to scale capacity as needed.
The company is the only one to have its SMR design certified by the U.S. Nuclear Regulatory Commission and it is targeting energy-intensive industries like AI data centers, mining, and semiconductor manufacturing, which require massive amounts of electricity.
The stock has gone on a roller coaster over the past year, reaching as high as $57 per share. As of Friday morning, NuScale is trading for around $21 per share. But before you scoop up the stock thinking it’s cheap, there is something you’ll want to consider first.
One crucial factor affecting NuScale Power’s economics is its agreement with ENTRA1, a partner that will help it commercialize and deploy its power module technology. As part of this deal, NuScale will supply its power modules to ENTRA1 energy plants, which look to provide carbon-free baseload power for data centers and industrial use.
The move gives NuScale a potential long-term partner to help deploy its technology on a wide scale. Its small modular reactor (SMR) technology was selected for ENTRA1’s agreement with the Tennessee Valley Authority (TVA). NuScale CEO John Hopkins called it a “historic agreement” and the “largest SMR deployment program in U.S. history.”
This arrangement is a response to the failure of NuScale’s previous project (the Carbon Free Power Project in Idaho), which was cancelled in 2023 due to rising costs. By using ENTRA1 as an intermediary, NuScale can deploy its technology without requiring utilities to take on the massive upfront debt typically associated with nuclear construction.
While the structure of this agreement alleviates utilities’ financial burden, it puts significant pressure on ENTRA1 and NuScale to finance the venture and could be highly dilutive to shareholders. According to analysts at BNP Paribas, the deal fundamentally changes how NuScale should be valued, and they estimate that NuScale could pay $6 billion over the next 15 years under this agreement.
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