Most of us in the U.S. take it for granted that when you flip a light switch, the lights will come on almost instantly. Indeed, we may never think twice about where the power comes from or whether it will be there tomorrow, because for most of our lives, we’ve never had to worry about it stopping or running out.
And yet this reliance, which is a massive achievement of industry, technology, and science, is now being tested. You can probably guess where I’m going with this: Artificial intelligence (AI), data centers, electric vehicles (EVs), and a greater effort to electrify the economy are driving electricity demands higher.
By 2030, the International Energy Agency (IEA) expects U.S. electricity demand to rise by roughly 20% to 25%. There’s no other way of saying it: That’s an enormous amount of electricity in a short period of time. The future, in other words, needs power. And if you’re picking up what I’m laying down, the companies capable of supplying it could be on the cusp of enormous growth.
One of those is NuScale Power (SMR -0.17%), and now is the time to buy it. Here’s why.
Today’s Change
(-0.17%) $-0.02
Current Price
$8.59
Key Data Points
Market Cap
Day’s Range
$8.38 – $9.01
52wk Range
$7.21 – $57.42
Volume
13.4M
Avg Vol
32.8M
Gross Margin
19.69%
NuScale could be entering its most important decade ever
In a nutshell, NuScale has an NRC-approved small modular reactor (SMR) to deploy. It hasn’t deployed a reactor commercially, but it is pursuing two tentative first deployments, one in Romania and the other in the U.S., with ENTRA1, its commercial partner, and Tennessee Valley Authority (TVA), the largest public utility in the country.
The former project targets the first of NuScale’s six modules going online in 2033, while the latter, which could see 72 modules deployed, has yet to establish an estimated timeline (it’s not a binding agreement yet).
These first projects will likely be NuScale’s most challenging to execute. Indeed, whenever you introduce new technology, the first few deployments are usually the most expensive, time-consuming, and least efficient. That was true for Tesla‘s early vehicles, and it’s true for a small nuclear reactor, which the U.S. has not seen in commercial operation before.
Image source: Getty Images.
I would judge the success of NuScale’s first project, therefore, not by whether it becomes a cash cow but by whether it removes uncertainty and produces, as a result, confidence that the project can, and will, be repeated.
If it can establish confidence by demonstrating that its SMR technology is operationally safe and generates electricity at competitive costs, then it can remove perhaps the greatest barrier to customers today: the reluctance to commit billions of dollars to a first-of-its-kind reactor.
My prediction is that by 2036, confidence will be firmly established. Even if NuScale only deploys a dozen modules by then, or roughly 15% of the 78 modules in its project backlog, its technology will be viable enough to attract other electric utilities whose grids are facing rapid growth in electricity demand.
At that point in the future, I think some investors will have wanted to buy NuScale stock when the company was still in a tough transition, legally allowed to deploy its SMR technology but constrained by time and manufacturing capacity to deploy at scale. At about sub-$8 a share today, this nuclear energy stock has the potential to become a long-term wealth builder for risk-tolerant investors who can hold for a decade or more.
