NuScale-Utah SMR deal collapses for lack of electricity subscribers

After ten years in the development, $1.4 billion dollars from the US Department of Energy  and the recently enacted Inflation Reduction Act offer of an additional subsidy estimated at $30/MWh, the Portland, OR-based NuScale Power Corp. and Utah Associated Municipal Power System (UAMPS) have mutually agreed to terminate their contract to license, build and operate six 77-megawatt electric (462-megawatts) VOYAGR Small Modular Reactors (SMR) on federal land courtesy of the US Department of Energy’s Idaho National Laboratory. The VOYAGR design  adopts a miniaturized conventional Pressurized Water Reactor with up to twelve modular units operated from one control room.

While the VOYAGR reactor project design has yet to be certified as safe and reliable by the US Nuclear Regulatory Commission, the ballooning cost announced by NuScale in January 2023 for this still mirage reactor’s construction and operations had shaken the confidence of the 27 subscribed cities of UAMPS 50 participating municipal electric coops primarily in located in Utah but also servicing  coops in Arizona, California, Idaho, Nevada, New Mexico, and Wyoming. As of March 2023, NuScale subscriptions for power purchases represented around 26% of the projected electrical output of the project. NuScale contractual agreement with UAMPS subscribers requires the project’s Levelized Cost of Energy (LCOE) to remain under $89/MWh and develop a strong power subscription of 80% by February 2024. After that the subscribing consortium could exercise its option to pull the plug.  NuScale was nowhere near the 80% subscription rate (370 MWe) with 120 MWe of the proposed 462 MWe generating capacity, far short of the contracted bottom line for the subscription rate.

More recently, UAMPS confidence was very likely further shaken by a report published in October 2023 by Iceberg Research, an investments investigator specializing in “earnings misrepresentation and accounting irregularities in financial statements issued by public companies” that put NuScale on the financial hot seat. Iceberg Research has alleged that NuScale  cut a deal with a “fake customer” valued as a $37 billion purchase for 1,848 MWe for 27 VOYAGR units to one end user, Standard Power, a US startup cryptocurrency data miner looking to develop projects in Ohio and Pennsylvania. Iceberg Research’s report alleges that the NuScale “contract has zero chance of being executed as Standard Power clearly does not have the means to support contracts of this size.”

The Iceberg Research report further delved into the NuScale-UAMPS contract headlining, “The situation at the Carbon Free Power Project (UAMPS) is much worse than what NuScale lets on.” In that regard, Iceberg Research added, “we noted that former (NuScale) CFO Chris Colbert has been selling his shares since May 2023, fully unloading his stake on 13 October 2023 – reaping total gross proceeds of ~$1.7m over this period. This could be a leading indicator of NuScale’s unspoken issues.”

The Iceberg Research report’s conclusion could not have boosted UAMPS equity holders much confidence., “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.”