Nucor Corporation

In news that went widely uncirculated in the media, nuclear energy might be finally staging a comeback:

Last week, when the G7 met in Hiroshima, five of the seven countries agreed to a new nuclear fuel agreement to strengthen energy security and weaken Russia’s influence in the industry. This landmark agreement was welcomed by the nuclear industry, which has endured many years of negative PR between Chernobyl, Fukushima, and Zaporizhzhia. Despite these mostly isolated incidents, nuclear energy remains the most reliable energy source in the world, according to the Department of Energy.

Negative publicity aside, the other barrier inhibiting the growth of nuclear energy usage is the high upfront costs of constructing nuclear power plants. Between millions of tons of concrete, reliable water sources, graphite blocks, and acres of land, the costs have deterred many governments and companies from the energy source.

However, it seems people have realized this fundamental issue and have begun exploring a new type of power plant called Small Modular Reactors, or SMRs for short. SMR facilities are far smaller than their traditional counterparts, more efficient, and can be operated in up to 80% of previously coal power plants.

This breakthrough is significant because many Western governments have begun phasing out coal power, leaving hundreds of abandoned coal power plants scattered across the country. Considering that most of these plants can be retrofitted to accommodate SMR facilities, along with many of them being strategically positioned across the country, it’s easy to understand how this makes SMR's an enticing option.

Because of this, several companies have been investing heavily in SMR development to capture this newfound opportunity. While many have made breakthroughs, currently, only one company has received certification for its Small Modular Reactor design by the Nuclear Regulatory Commission (NRC): NuScale Power Corporation (NYSE: SMR), obtaining approval for its SMR design in January of 2023. This is significant as the pre-approved design means that they can sell or lease their SMR systems to utilities or other customers without needing those customers to go through a lengthy process of getting a new reactor design approved.

It seems as if this design is already garnering attention: Nucor (NYSE: NUE), one of the top steel producers in the world, signed a Memorandum of Understanding with NuScale Power to explore the deployment of NuScale’s VOYGR Small Modular Reactor (SMR) power plants near Nucor’s steel mills. This agreement underscores the growing interest in SMRs among industry leaders and gives NuScale a sort of moat in the SMR space.

More recently, a project to deploy the first NuScale VOYGR-6 nuclear power plant in Romania by 2029 has garnered a $275 million public-private funding commitment from the U.S., Japan, South Korea, and the United Arab Emirates (UAE) as part of a global infrastructure partnership.

Given the reception NuScale has accepted from companies and governments, alongside their first-mover advantage, they're certainly a company with a lot of potential worth keeping an eye on while their first few facilities are set to come online in the near future.

Disclaimer: The views expressed in this article are solely those of the author and should not be construed as financial or investment advice. It is recommended to conduct thorough research and consult with a professional financial advisor before making any investment decisions.