Many think it’s the future of nuclear energy: sleek, factory-built reactors that could plug directly into the power grid or sit beside a data center, cleanly and quietly supplying electricity.
And NuScale Power was the first out of the gate.
The Oregon State University spinoff received Nuclear Regulatory Commission design certification for its small modular reactor (SMR) in January 2023. NuScale is still the only company that can claim that — and it’s on track to get its second approval in July, before any of its competitors get their first.
But many in the industry now view the company as a case study in how quickly a lead can be squandered. In the last year and a half, NuScale has canceled its flagship reactor project in the Rocky Mountains and slashed its workforce by more than one-quarter.
“They were ahead of the horse race by a mile, “ said Edwin Lyman, nuclear safety director at the Union of Concerned Scientists. “And the fact that they’re not succeeding really sends a signal.”
But NuScale maintains strong proponents, especially among financial analysts. They point out that the company has supply chains secured, has a head start on federal approval and is approaching firm customer agreements.
“As momentum for the overall nuclear industry continues to gain steam, we think the stage is now set for NuScale Power as it capitalizes on its market leading position with a nearterm deployable solution,” wrote Eric Stine, an analyst at Craig-Hallum Capital Group, in his note on NuScale’s May earnings call.
POLITICO’s E&E News spoke with industry consultants, former NuScale employees and financial analysts about the past, present and future of the company. They paint a picture of a company that fumbled and fell behind — but may still gain purchase in an evolving industry full of unpredictable players.
Promising start
NuScale’s journey began in the early 2000s with technology spun out of Oregon State. It was hailed as a pioneer: The company’s modular design had compact, passive safety features and was intended to be built in factories and shipped to sites across the country.
Helmed by CEO John Hopkins, NuScale hit the jackpot in 2015 when the Department of Energy agreed to host the company’s small modular reactors at the Idaho National Laboratory. The partnership — called the Carbon Free Power Project — resulted in DOE providing NuScale with hundreds of millions of dollars.
More importantly, the project supplied NuScale with customers: 46 local utilities in Utah. These smaller utilities were represented by the Utah Associated Municipal Power Systems agency, or UAMPS.
In 2023, NRC had green-lighted a formal design certification for NuScale’s 50-megawatt reactor. That year, engineers and industry observers broadly agreed that NuScale was by far the most ahead in the SMR race.
“NuScale was the clear leader,” said M. V. Ramana, a professor at the University of British Columbia’s School of Public Policy and Global Affairs. “I think of this as something like tennis. There are periods when there’s one person who’s really winning all the matches — it’s Roger Federer or Rafael Nadal.”
But that’s all changed in the past year and a half, Ramana added, continuing his tennis analogy.
“Then there are periods when there is no clear winner. One person wins Wimbledon and one person wins the U.S. Open. I think the scene with small modular reactors today is a little bit like that. There is no clear leader,” he said.
In late 2023, critics in the investment community began raising red flags. Iceberg Research, a short seller, publicly challenged NuScale’s business prospects and the credibility of its development partners. The company’s stock price plummeted from $15 in mid-2022 to under $3 by the fall of 2023.
In November 2023 — less than a year after NuScale achieved its milestone NRC approval — the Carbon Free Power Project was dead.
Into the fire
Despite the influx of federal funds, NuScale struggled to keep costs low enough for customers. The company originally projected that the reactors would generate 1 megawatt-hour of electricity for $55, but the target price had jumped to $89/MWh and might have risen even more.
UAMPS backed out, worried that its customers would bear the project’s costs alone. In an email, the agency said the Carbon Free Power Project “conditioned moving forward with the project on finding additional off-takers, which did not happen.”
“Potential off takers were concerned with taking on the risks associated with developing a first of a kind nuclear project,” UAMPS wrote.
On one level, the price hikes shouldn’t have been surprising. Nuclear reactors almost always run over budget and blow past deadlines — often by dramatic margins.
The U.S.’s two newest reactors, Vogtle Units 3 and 4 in Georgia, cost twice their initial estimate and came online years behind schedule. But in that case, reactor developer Westinghouse was serving Southern Co., the second-largest utility in the country.
“The shareholders covered a lot of the cost of overruns of both those projects,” said one former NuScale employee, granted anonymity to speak freely. “UAMPS had no shareholders. Any cost was going to be passed to their customers.”
The employee said some in the company encouraged Hopkins to chase different customers, like public firms that needed electricity and had shareholders who could absorb early costs. Those internal critics believed early on that the project couldn’t count on UAMPS alone, the employee said.
“The costs are gonna go up, and you’re competing with cheap natural gas. It’s not gonna work,” the employee said.
Others who spoke with POLITICO’s E&E News echoed the criticism of UAMPS as a first-of-a-kind nuclear customer. In addition to UAMPS’s slim margins, the agency had no experience with nuclear power.
NuScale also ditched its original NRC-approved 50-MW design to pursue revised 77-MW modules partway through the Carbon Free Power Project.
“They decided to essentially discard their original certified design, uprate the reactor and make significant design changes that created a whole long list of technical issues that required additional significant work to resolve,” said Lyman at the Union of Concerned Scientists.
“The reason why they’re doing that is to improve the economics, to reduce the pain of the diseconomies of scale. But it hasn’t seemed to work. It hasn’t really made the reactor affordable enough that anyone is willing to commit to buying,” he continued. “They sabotaged their own lead by doing that.”
A second wind?
NuScale maintains that the Carbon Free Power Project was still a “tremendous success.” The project, the company said, advanced reactor technology, bringing NuScale closer to the “stage of commercial deployment”; it also provided a platform to engage with customers both in the U.S. and internationally.
UAMPS echoed that positive outlook.
“Throughout the early stages of the project, CFPP achieved noteworthy milestones and produced valuable work product especially relating to licensing that will provide a foundation for future projects in the industry,” the agency wrote.
As NuScale’s Utah project stalled and eventually failed, rivals were catching up — and fast. GE Hitachi’s BWRX-300 SMR garnered the backing of Ontario Power Generation and the Tennessee Valley Authority — two of North America’s largest utilities, each with extensive nuclear experience and large operating reactor fleets.
Unlike startup NuScale, GE Hitachi already has revenue from existing reactors and other products.
“It’s one small project at a large company,” Lyman noted. That diversification gives competitors more time, flexibility and funding to weather setbacks.
But beginning in the spring of 2024, NuScale stock began to tick back up and then surged.
By November, it had reached an all-time high of $30 per share. Though investor enthusiasm has moderated, the company’s share prices remain higher today than at any point during the Carbon Free Power Project.
Chris Gadomski, a nuclear analyst at BloombergNEF, said this second wind is part of a larger anticipation that the world is entering a nuclear renaissance driven by energy-gobbling artificial intelligence and data centers. Since technology firms typically have ambitious sustainability goals, they are flocking to nuclear as a green and ultra-reliable fuel.
Google, Microsoft, Amazon and Meta have pledged and paid billions of dollars to support nuclear power through agreements with Kairos Power, Constellation Energy, X-energy and other nuclear players.
This rising tide has lifted all boats in the nuclear realm, including firms like NuScale that don’t yet have the same big tech backing.
Another first
NuScale has also begun gearing up to take advantage of that new market.
In January 2024, the company laid off 154 employees — largely those on the technical side, such as engineers — and said it would dedicate more resources to commercialization.
That year, Hopkins said the company was shifting its marketing to focus more on “hyperscalers” like data center developers. The startup has plans to power data centers in Ohio and Pennsylvania, has committed over $2 billion to its SMR development, and has already begun building the non-nuclear parts of its reactors.
NuScale’s designs use existing nuclear fuel, while many competitors like Kairos and X-energy need advanced reactor fuel that isn’t yet commercially produced outside of Russia.
The company is also still ahead on permits. NuScale is advancing a Standard Design Approval application for its 77-MW uprated reactor, building on the same safety features licensed in 2023. NRC Chair David Wright said in February that the company should be getting its approval for the reactor in July.
All of this means NuScale is in the ballpark for another SMR landmark: firm commercial agreements.
“In the second half of 2024 and early 2025, you’ve seen a number of high-profile announcements [throughout the industry], but I will say that many of those announcements are letters of intent and memoranda of understanding and not really firm,” Stine, the analyst, said in an interview.
He noted that, despite its ultimate abandonment, the Carbon Free Power Project imparted significant experience on NuScale, including dipping into module fabrication and other supply chain processes.
“NuScale, as you heard on their May 12 conference call, says, ‘We’re beyond LOIs and MOUs, and if we sign something, it is near-term deployable,’” Stine said. “They are able to say near-term deployable because of their supply chain and regulatory progress. That, I think, is kind of a distinction.”
On that May earnings call, the company said it was targeting as many as 10 firm commercial agreements to be finalized this year.
But in a crowded field now flush with innovation and patient investors — from TerraPower’s Bill Gates-funded sodium-cooled designs to Google-backed Kairos Power’s demonstration reactor in Tennessee — NuScale’s early-mover advantage has eroded.
Still, experts disagree on how much that matters.
“They’re clearly no longer the leader. They are somewhere in the back — but it’s not clear where,” Ramana at the University of British Columbia said. He thinks, for example, that the company’s $89/MWh price tag for UAMPS could repel potential customers given dramatically cheaper alternatives.
Stine, in contrast, thinks that the costs will differ between projects. He counters that NuScale’s experience with UAMPS should bolster its appeal to customers who want greater confidence in how the development process will play out.
“I do think that they’re one of the leaders,” Stine said. “NuScale is very financially strong. This is the most cash they have ever had on the balance sheet. They’ve got over $500 million in cash.”
“They have a pretty long runway as they work through some of their goals,” he continued. “But again, every company in this space, they’re going to need to prove it.”
