Debra Fiakas, managing director, said that a solid balance sheet is necessary to be a viable company that sells expensive products, speaking of public companies. She added that raising capital through a special purpose acquisition company (SPAC) is one way to finance a company.
But entering the market in the form of a SPAC, which is essentially a shell company, poses more risk than using an existing company to launch a traditional initial public offering. Analyst Joshua Enomoto wrote in a May 2 assessment of NuScale for financial media outlet Benzinga that business combinations that are allowed to enter the market as SPACs “suffer greater losses than benchmark stock indices.
Breach of trust?
Portland-based NuScale said it would create a “smarter, cleaner, safer and cost-competitive energy source.
A February report by the Institute for Energy Economics and Financial Analysis refutes these “promises that have been made and broken over the history of the nuclear power industry.
But David Schlissel, director of resource planning analysis at IEEFA and co-author of the report, welcomed the company’s entry into the public market. I think it’s a good move because now they will be held to stricter standards on what they claim to be,” he said, including the company’s projected $58/MWh price tag for key projects with Utah’s United Municipal Power System (UAMPS).
According to the U.S. Department of Energy, NuScale reached agreements with 33 of the 50 members of UAMPS in 2017 to deliver a dozen 50 MW modules that will be located at Idaho National Laboratory and come online in 2024. LaVarr Webb, a UAMPS spokesperson, said the initial 600 MW project was then modified into six larger modules, each 77 MW, to come online in 2029. The current number of participants is 27. Some members dropped out in 2020.
But according to Webb, the project changes were made early on, and having 27 members participate was high for members who chose to sign on to the UAMPS power project, he said, adding that UAMPS was pleased to see NuScale come to market.
The estimated cost of NuScale’s 462-megawatt project is $5.3 billion, Webb said. “That includes more than 40 years of financing and takes into account inflation, rising wage rates” and other variables, he noted
IEEFA’s Schlissel disputed what he called NuScale’s $58/MWh underestimate, but said that even if that’s a realistic figure, it’s still much higher than the cost of renewable energy projects. Utility-scale solar plus storage costs about $45/MWh and falling; he noted that wind power costs $30/MWh and falling, while utility-scale solar alone costs $32/MWh and falling.
A 2019 report issued by Energy Strategies consultants for the Utah Coalition for a Healthy Environment concluded that “SMR will cost at least $35 million more per year than the alternatives.” Energy Strategies concluded, “In present value terms, compared to the SMR Base Case portfolio, the alternative portfolio would save between $298 and $355 million in present value terms compared to the SMR Base Case portfolio.” A key issue related to successful commercialization is that NuScale’s UAMPS project design has not yet been fully certified by the Nuclear Regulatory Commission.
In August 2020, NuScale became the first developer of a small modular reactor to pass the U.S. Nuclear Regulatory Commission’s safety assessment, when the license was expected to be completed in August 2021.
But the UAMPS reactor design was expanded from 50 megawatts to 77 megawatts, and NRC staff raised concerns about the company’s seismic analysis. In addition, Lyman of the Union of Concerned Scientists warned that unresolved safety issues could lead to increased costs during the operating licensing phase.
“The biggest issue is cost, followed by risk,” Rys agreed.
Hughes said NuScale plans to submit its standard design to the NRC for approval this year and hopes it will be approved in 2025.
Rys said it will take about a year after the initial public offering to know if NuScale’s financial position is solid as it prepares to file.
But the company may have a first-mover advantage.
Rys predicts that the first SMR developer “will dominate the business and put others out of business.
