NuScale Power has experienced a significant setback with the elimination of one potential market. On Thursday, shares of NuScale Power (NYSE: SMR) declined by 3.2% by 11 a.m. ET following unfavorable news from the United Kingdom. According to World Nuclear News (WNN), the British government has reduced the number of companies competing to build small modular nuclear reactors (SMRs) to four, excluding NuScale.
WNN reported that the initial competition included six companies but has now been narrowed down with NuScale and France’s EDF being removed from consideration. The remaining contenders are General Electric subsidiary GE Hitachi Nuclear Energy, Rolls-Royce-owned Rolls-Royce SMR, and privately held Holtec and Westinghouse, with their designs incorporating existing technology and modular production techniques.
The U.K. government plans to further narrow the list to two or three companies that will receive co-funding contracts to finalize their designs and secure permits. A final decision on power plant construction is expected in 2029.
For investors, this development presents mixed implications. On one hand, there remain opportunities to invest in the SMR technology through publicly traded companies such as GE and Rolls-Royce. However, the exclusion of NuScale Power represents a significant loss, particularly as NuScale was seen as a close-to-pure play in this emerging technology.
Additionally, this exclusion could influence perceptions of NuScale’s technology among U.S. regulators, potentially posing further challenges for the company. Conversely, the remaining options, Rolls-Royce and GE, have large market valuations of $60 billion and $200 billion respectively, indicating that while nuclear power could grow within their business models, it may take significant time before this growth becomes substantial in terms of revenue and earnings impact.
Investors looking for pure play investments in nuclear power may need to consider other alternatives following these developments.
Rich Smith, the article’s author, holds no position in the stocks mentioned. The Motley Fool recommends investments in NuScale Power and Rolls-Royce Plc, adhering to their disclosure policy.