Nuclear Power Gains Momentum Amid Growing Energy Demand

In light of recent developments in the nuclear power sector, investor interest is surging as several key players commit to expanding nuclear energy capacity to meet net-zero emissions targets. This trend is predicted to affect stock prices notably, particularly for companies like NuScale Power.

Date: 13-10-2024

AI Rating: 5

Analysis of Nuclear Power Sector Developments

The report highlights a renewed interest in nuclear power, driven by increasing energy demand, particularly from the tech sector's AI initiatives. The commitment from banks and countries to enhance nuclear energy capacity could positively impact stock prices in this sector.

NuScale Power (NYSE: SMR), a key player in developing small modular reactors (SMRs), has already seen a rise in its share price following these commitments. The small modular reactors are positioned as scalable and cost-effective solutions for energy needs, especially amidst the growing energy requirements of big tech.

Cost Challenges Faced by NuScale

Despite the potential for growth, NuScale has experienced setbacks, including substantial cost overruns and project delays. The initial estimate for a reactor project ballooned from $3 billion to $9.3 billion, leading to the cancellation of its first planned operational SMR and a financial charge of $50 million. Such challenges may negatively influence investor sentiment surrounding the stock.

Future Prospects with Licensing and Competition

Looking ahead, NuScale is awaiting design approval for its 77 MWe reactors, which is critical for its future operations and competitiveness. However, the expectation that it may take years for full certification indicates ongoing uncertainty. In the next five years, the Nuclear Regulatory Commission anticipates numerous licensing applications from competing firms, adding pressure on NuScale to demonstrate operational viability and cost efficiency.

Conclusion and Investment Sentiment

While the developments in nuclear power and the commitment to SMR technology may present growth opportunities, the immediate challenges faced by NuScale require investors to proceed with caution. Investor sentiment is likely to fluctuate based on the company’s ability to overcome current hurdles and achieve commercial operations.

Stocks: SMR CEG MSFT ORCL