Is NuScale Power IPO a Good Buy?

If one silver lining exists amid the catastrophic events following Russia’s unsettling decision to invade Ukraine, it’s that international policymakers woke quickly from their…

ideological slumber, recognizing the urgency of energy sustainability and independence. Naturally, the broader focus has turned to renewable energy infrastructure but eventually, those same eyes may zero in on nuclear power. And this dynamic brings the discussion to NuScale Power.

Easily one of the most compelling yet simultaneously controversial names among companies poised to launch their initial public offerings (IPOs), NuScale specializes in a novel subsegment of the nuclear energy industry called small modular reactors (SMRs). Unlike traditional nuclear power plants, SMRs feature — as the label suggests — a much smaller footprint. In turn, this revolutionary field can punch well above its weight while minimizing hazards should circumstances go awry.

But with incidents such as Three Mile Island, Chernobyl and more recently the Fukushima Daiichi Nuclear Power Plant, why would investors consider a nuclear-powered facility like NuScale? The answer, per the Office of Nuclear Energy, comes down to capacity factor. The namesake sector features a capacity factor of 92.5%, meaning that it’s always on and productive. On the other hand, wind and solar power facilities only put out 35.4% and 24.9%, respectively.

Bottom line, to promote a holistically clean energy infrastructure without compromising the intense power demands of modern, innovative societies, nuclear facilities cannot be arbitrarily removed from policy-guiding decisions. Thus, investors should think carefully about NuScale and its IPO.

What Does NuScale Power Do?

NuScale Power is an advanced nuclear power facility. But unlike its traditional and legacy competitors, NuScale uses a proprietary and innovative carbon-free baseload and load-following power solution, thus representing “the only viable, near-term deployable U.S. advanced nuclear small modular reactor (SMR) technology.”

More importantly for surrounding residents and investors, “NuScale’s SMR technology is safe, reliable and scalable and the first and only to receive Standard Design Approval from the U.S. Nuclear Regulatory Commission.” In addition, SMRs feature these advantages, according to the International Atomic Energy Agency (IAEA):

  • Small profile: Physically, SMRs only take up a fraction of the size of conventional nuclear power plants, enhancing wider integration and also mitigating possible problems.
  • Useful modularity: Because of the subsegment’s adaptability, it’s “possible for systems and components to be factory-assembled and transported as a unit to a location for installation.”
  • Reactor mechanism: Just like any other nuclear powerplant, SMRs harness nuclear fission to generate heat to produce energy — it’s just that SMRs are far more flexible in their integrative capacity.

In addition, NuScale enjoys company-specific advantages as detailed in its FAQ section. Some core catalysts are listed below:

  • Competitiveness: Per the company’s website, “NuScale Power Modules are fully factory-manufactured with no in-field construction, erection or fabrication and they are transported to the power plant site — making our power plants less expensive to build, operate and maintain.”
  • Complementary nature: Rather than view itself as a competitor to renewable energy infrastructures, NuScale approaches the arena in a harmonizing framework, aiming to serve as a baseload power source and “and provide flexible load-following power to complement generation from wind and solar.”
  • Long-term necessity: NuScale’s management team notes that by 2030, “the U.S. will see 91 coal power plants enter into retirement, which translates to a loss of 97 GW [gigawatt] of capacity.” A highly reliable and space-saving solution will likely be needed, potentially benefiting NuScale’s SMRs.

Finally, SMRs are attracting attention worldwide because of their inherent safety profile. Generally, this subsegment “relies more on passive systems and inherent safety characteristics of the reactor, such as low power and operating pressure,” per the IAEA.

“This means that…

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