NuScale on financial hot seat

VOYGR_NuScale Power Plant

The US Department Of Energy’s (DOE) poster child for new Small Modular Reactors (SMR),  NuScale Corporation, is on the financial hot seat following a report issued by  Iceberg Research on NuScale’s announcement that it has cut a deal for 24 units of its latest but still uncertified 77-megawatt pressurized water reactor design. Iceberg Research is alleging that NuScale has contracted with an alleged “phony client”, Standard Power, another startup limited liability corporation merging industrial scale cryptocurrency and nuclear power that has “zero chance of being executed.”

Iceberg Research is a recognized investments investigator who describes it’s goal as “Revealing financial manipulation and accounting frauds.” This investigation could very well send a shock wave through the  entire new reactor sector as legal investigations are being launched on behalf of NuScale investors. NuScale Corp went public on the New York Stock Exchange on May 2, 2022 under the ticker “NYSE: SMR.” Since then, its value has plummeted by more than 75% from a 2022 high point.

On October 6, 2023, NuScale announced a new reactor deal that Iceberg Research in turn  labelled a “delusional contract” for a $37 billion purchase for 1,848 MW electric of new reactors for one end user, Standard Power, a US startup  cryptocurrency data miner looking to develop projects in Ohio and Pennsylvania. Iceberg Research’s report lists Standard Power as having 30 employees and flagged the company’s management with warnings “investors beware.”

Standard Power’s CEO Maxim Sereshin is identified with an outstanding $54 million tax warrant in the State of New York indicating the failure iof his firm (Aurelian Global Holdings) to fulfill its tax obligations. The company’s former Managing Director Adam Swickle, a former CEO of United Currency Group, from May 2001 to December 2002, conducted a fraudulent offering of securities based on misleading information. He further lied to an FBI agent posing as an investor. The legal judgement against him ordered Swickle to pay back $483,989, plus $107,842 in interest, and a $120,000 fine. But Iceberg Research further disclosed that Swickle has a history of not paying previous court-ordered judgements.  Iceberg Research also reports that Standard Power’s Chairman of the Board, Douglas Wurth is also the Chair of a diagnostics/medical device company, Bluejay Diagnostics. The report points out that Bluejay Diagnostics’ “financials are dismal”, further noting that its Certified Public Accountant, the Boston-based Wolf and Company, in its 2022 audit had found that company’s “ability to continue as a going concern.”

NuScale’s other commercial partner Entra1 in the Standard Power reactor enterprise would develop, manage, own, and operate the NuScale SMRs with Standard Power being the end-user as the blockchain datacenter service provider. Iceberg Research traced Entra1, a Delaware-based to connections to Fluor Corporation, a leading US nuclear weapons manufacturer and NuScale controlling investor.

The NuScale’s “delusional” deal with Standard Power is not its only concern for its shaky financials that could shape up to be atomic power’s next collapse of its house-of-cards.  Iceberg Research also describes that NuScale’s has walked itself out onto a plank with its first and only other US reactor power agreement for a site courtesy of the federal government’s Idaho National Laboratory to construct  six more of these 77 MWe mirage units for a 462 MWe deal with the Utah Associated Municipal Power Systems (“UAMPS”). UAMPS is a western states consortium that supplies wholesale electricity to around 50 western municipalities. NuScale is having trouble holding the consortium’s power purchase agreement together following a number of municipal power defections, the latest choosing to turn instead to solar power and storage development.  As of March 2023, NuScale subscriptions for power purchased have fallen to 27 cities representing around 26% of the projected output.  Time is running out for NuScale to meet its contractual agreement with UAMPS subscribers to keep the project’s Levelized Cost of Energy (LCOE) to under $89/MWh and develop a strong power subscription of 80% by February 2024. After that the consortium could exercise its option to pull the plug.  But again, by last accounts, NuScale is nowhere near the 80% subscription rate (370 MWe) with only 116 of the proposed 462 MWe.

The Iceberg Research report concludes its assessment of the NuScale and Standard Power venture for the world’s presently largest SMR project with “Taking these factors into consideration, it appears that Standard Power does not have the balance sheet to support this contract, both in the present and in the future.”

Their report further concludes, “NuScale’s delusional contract with Standard Power seems more like an act of desperation to shore up investor confidence, rather than a strategic move. The company is struggling and we believe its equity has little to no value without government support. Even if that support continues, the DOE’s usual policy is that costs have to be shared with the private sector, meaning that existing shareholders will be diluted.”

Not surprisingly, on October 24, 2023, NuScale replied to the Iceberg Research report as “inaccurate.”

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