NuScale’s potential growth just got smaller by exactly one country.
Shares of NuScale Power (SMR -0.37%) slipped 3.2% through 11 a.m. ET Thursday on some disconcerting news out of Great Britain. According to World Nuclear News (WNN), the British government just narrowed the list of companies competing to begin building small modular nuclear reactors (SMRs) in the U.K. to four names.
NuScale isn’t one of them.
SMRs in the U.K.
According to WNN, the list of companies competing for this program initially numbered six, but two companies have been cut: NuScale and France’s EDF. General Electric subsidiary GE Hitachi Nuclear Energy, Rolls-Royce-owned Rolls-Royce SMR, and privately owned Holtec and Westinghouse all made the cut with reactor designs based on existing technology married to “modular production techniques.”
Britain plans to narrow its list further to two or perhaps three companies that will win co-funding contracts to complete their designs and obtain permits. Then the government will make a final decision to proceed with power plant construction in 2029.
Is NuScale Power stock a sell?
What does this mean for investors? In one way, it’s good news because two publicly traded stocks remain in the running — GE and Rolls-Royce — giving investors two ways to invest in small modular nuclear reactors becoming a real thing.
The bad news is that the closest company to a pure play in this new technology, NuScale Power, is now no longer an option in the U.K. Furthermore, Britain’s decision to pass on NuScale’s technology may give U.S. regulators second thoughts about it as well. All things considered, I’d say this is bad news for NuScale stock.
The other bad news is that the options that remain, Rolls-Royce and GE, are valued at $60 billion and $200 billion, respectively. While nuclear power may one day become a bigger part of their businesses, it’s going to be a long time before either company gets big enough in nuclear to move the needle on their revenue or earnings, or for investors to see them primarily as nuclear power stocks.
Investors seeking pure plays on nuclear power should probably look elsewhere.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power and Rolls-Royce Plc. The Motley Fool has a disclosure policy.