NuScale Power's Stock Decline: Is Nuclear Fusion the Real Threat to Small Modular Reactors?

The stock price of NuScale Power, a leading developer of small modular reactors (SMRs), has fallen by over 30% since early 2024, sparking investor concerns about the long-term viability of its technology. While macroeconomic pressures and regulatory delays are often cited, a quieter narrative has emerged: fears that breakthroughs in nuclear fusion could render SMRs obsolete. But is this anxiety justified? A closer look at the data reveals that fusion's commercialization timeline remains distant, while SMRs like NuScale's are already on track to dominate the baseload energy market for decades. For investors, the decline may present an opportunity to buy a fundamentally sound asset at a discount.

The Fusion Hype vs. Reality

Recent advancements in fusion, such as France's record-breaking 22-minute plasma duration and the U.S. National Ignition Facility's net energy gain milestone, have fueled optimism about its potential. However, the path to commercial fusion remains fraught with challenges. According to industry analyses, the first fusion power plant capable of generating consistent baseload electricity is unlikely before the mid-2040s. Even then, its cost is projected to be $150–200/MWh, far above the $40–60/MWh Levelized Cost of Energy (LCOE) that SMRs like NuScale's are targeting by the mid-2030s.

The key technical hurdles—neutron damage to reactor walls, superconducting magnet limitations, and the need for advanced materials—are not trivial. Fusion's reliance on deuterium-tritium fuel cycles also introduces proliferation risks and supply chain complexities, such as tritium breeding, which SMRs avoid entirely.

SMRs: A Proven Near-Term Solution

SMRs, by contrast, are a mature technology leveraging decades of nuclear fission expertise. NuScale's design, for instance, uses light-water reactors with passive safety features, modular construction, and scalability. Its first-of-a-kind plant in Idaho, slated for completion in 2029, will supply 60 MW of baseload power—proving the model's feasibility.

The economics are compelling: SMRs benefit from economies of scale through standardized manufacturing and shorter construction timelines. Unlike fusion, SMRs already have proven supply chains and regulatory frameworks, enabling faster deployment. The International Energy Agency (IEA) estimates that SMRs could fill a 400–800 GW clean firm power gap by 2050, a market too large for fusion to address in the near term.

Why NuScale's Decline May Be Overdone

Investor pessimism about NuScale appears overblown, driven by misplaced fusion fears rather than SMR fundamentals. Key positives include:
1. Regulatory Tailwinds: The U.S. Inflation Reduction Act (IRA) offers $6 billion in tax credits for advanced nuclear projects, directly benefiting NuScale's Idaho plant.
2. Global Demand: Countries like Poland, Romania, and Indonesia are exploring SMRs to decarbonize grids while avoiding reliance on intermittent renewables.
3. Competitive Position: NuScale's partnership with Fluor Corporation for engineering and construction provides a cost-efficient path to commercialization.

Critics point to NuScale's reliance on public-private funding, but this mirrors the trajectory of all early-stage nuclear ventures. The company's stock decline may reflect broader market volatility rather than a loss of faith in its SMR proposition.

Investment Thesis: Buy the Dip

For long-term investors, NuScale's current valuation offers an attractive entry point. The stock's price-to-sales ratio has dropped to 3.5x, below its 2023 average of 5.2x, despite no material changes to its pipeline. Meanwhile, fusion's commercialization risks—technical, financial, and regulatory—remain substantial.

The 2030s are SMRs' decade, with NuScale positioned to capture a significant share of the $500 billion global nuclear market. Investors should consider:
- Buying on dips below $10/share, with a 12–18 month target of $15–20.
- Holding for the long term, as SMRs' baseload advantage and decarbonization role ensure sustained demand.

Conclusion

While fusion is a thrilling scientific endeavor, it is not a credible threat to SMRs in the next decade. NuScale's stock decline appears rooted in overhyped fusion fears rather than SMR-specific risks. For investors willing to look past short-term volatility, NuScale's undervalued shares offer exposure to a technology that will likely define the next era of clean energy.

The next catalyst for NuScale's stock could come from its Idaho plant's 2029 grid connection or new international partnerships. Until then, the fusion narrative is a distraction—not a dealbreaker.