Renaissance of the nuclear industry: destruction of capital with small reactors

Investors are becoming increasingly skeptical about the small reactors announced by the nuclear industry, so-called Small Modular Reactors (SMRs). While the nuclear industry likes to tout modular blocks as a new option for generating electricity and advertise that costs will fall with series production, investors are turning away: the relevant companies have lost considerable stock market value in the last twelve months.

The shares of the Californian company Oklo, for example, lost 79 percent of their value within a year. The company wants to build a corresponding reactor module by 2028. The Oregon company Nuscale has had the first and so far only SMR design certified in the USA, but here too investors are becoming increasingly skeptical: minus 86 percent in twelve months.

Other companies feel the same way. NanoNuclear Energy from New York has lost 72 percent of its stock market value in one year, Newcleo, headquartered in Paris, 57 percent. Things aren't looking any better for Deep Fission (minus 82 percent) and Centrus Energy, a nuclear fuel supplier for SMR, with minus 70 percent.

The fact that not a single SMR is yet in commercial operation even in the USA is “the detail that many investors only discover after they have bought the share,” the tech and investment portal Startup Fortune recently mocked.

In the meantime, even those companies that still want to go public are feeling that the market is turning: the SMR company Holtec Nuclear, based in the US state of New Jersey, postponed its planned IPO in September on the grounds that the mood on the stock markets and in the nuclear sector was too negative.

Nevertheless, the lobby association Nuclear Technology Germany (KernD, successor to the German Atomic Forum) does not want the recent price developments to be understood as investors' distrust of the SMR concept. The price losses are rather a “correction of previously very high market expectations”. In particular, the prospect of a sharp increase in electricity demand due to AI and data centers has increased the capital markets' interest in the technology. Now the courses “reflect, above all, a more realistic assessment of the economic and industrial challenges”. The questions of practical implementation came more to the fore - i.e. approval procedures, financing, industrial supply chains and the realization of the first commercial projects.

The Atomic Energy Association admits that “the expected cost advantages through standardization and series production must first be confirmed in practice”. Nevertheless, the current prices are “not a suitable benchmark for assessing the long-term prospects of the entire SMR technology,” says a spokeswoman for KernD. In any case, a distinction must be made between the individual companies and reactor concepts: “While some SMRs are based on proven light water technology, other concepts are still in earlier development phases.”

The nuclear policy advisor Mycle Schneider from Paris, on the other hand, sees tangible reasons for the price losses: “The SMR companies are burning an incredible amount of cash and so far have nothing but faith to sell,” says the main author of the annual World Nuclear Industry Status Report. This development cannot continue for long: “Perhaps we are just seeing the speculative bubble burst.” The cumulative destruction of capital by companies over the course of a year is in the double-digit billion range.

And what do the big German banks say, which always have an eye on the important industries and can always provide appropriate analysts? Nothing. When asked for an assessment of the nuclear companies, there were a number of rejections. Then it was said: “Unfortunately we have no research on developments at nuclear companies.” Or, “unfortunately, we cannot provide a suitable analyst for an interview.” Which in the end says a lot about the relevance of nuclear companies.