NuScale Wouldn't Own a Reactor in the Deal Driving Its Stock

NuScale Power's (NYSE:SMR) stock market value stands near $4 billion as of this writing. Nearly all of it rests on one program: the Tennessee Valley Authority's plan to add up to 6 gigawatts of nuclear power built on NuScale's small modular reactors. That could mean about 72 of the company's 77-megawatt modules -- the largest deployment of its kind in U.S. history if it converts.

But the agreement behind that program was signed by TVA and ENTRA1 Energy, NuScale's exclusive commercialization partner. NuScale wasn't a party to it.

That detail, I'd argue, matters more than it seems, because the structure of the arrangement determines what a landed contract actually pays NuScale. And based on the companies' own releases and filings, what NuScale stands to collect is narrower than the growth stock's moves on TVA news suggest.

Image source: Getty Images.

ENTRA1 owns the plants

Under the announced structure, ENTRA1 would develop, finance, own, and manage the plants (it brands them ENTRA1 Energy Plants) and sell the electricity to TVA under future power purchase agreements.

NuScale, meanwhile, is named the key supplier of that reactor technology (the only small modular reactor design approved by U.S. regulators). They also hold ENTRA1 NuScale, a 50/50 joint venture the two companies formed.

The scale explains the market's interest. TVA and ENTRA1 say the program could power the equivalent of about 4.5 million homes, or 60 new data centers, at a time when artificial intelligence (AI) and other energy-hungry technologies are pushing electricity demand higher.

Importantly, the September 2025 agreement between TVA and ENTRA1 is non-binding. NuScale said earlier this month that ENTRA1 "continues to advance discussions" with TVA toward a definitive power purchase agreement.

Until one is signed, nothing is contracted.

So NuScale's role, if the program converts, is that of a supplier -- selling modules into plants someone else owns, while that someone else collects the power revenue.

NuScale pays as the deal advances

Interestingly, at this stage the money is moving from NuScale to its partner. Under a Partnership Milestones Agreement the companies signed in August 2025, NuScale owes ENTRA1 payments as the program hits milestones. And the first one has already come due.

When ENTRA1 reached its non-binding agreement covering 72 modules, NuScale recorded a $507.4 million expense for that first milestone, which its filings describe as 15% of the total. The company paid $247.5 million of it in 2025 and another $259.9 million in the first half of this year. Largely as a result, NuScale's operating cash outflow reached $372.9 million in the first half of 2026, up from $56.1 million in the same period a year earlier.

And bigger payments are still ahead.

A binding power purchase agreement (the very milestone investors are waiting for) triggers the second payment, worth 35% of the total. If the 72-module scope holds, the math puts that second payment near $1.2 billion. A third tranche, worth half the total, comes only with an actual module order.

For scale, NuScale's revenue in the second quarter of 2026 was $75,000. Not $75 million -- $75,000, down from $8.1 million in the year-ago quarter, most of which came from a single related-party project. The company produces no net income either, with its loss over the past 12 months topping $400 million. Revenue, in other words, is shrinking while the payments to its partner climb.

To be fair, the company holds $1.9 billion in cash and investments, though it raised about $962 million of that by selling new stock in the second quarter alone. And on Aug. 11, it opened another program to sell up to $750 million more.

What does a landed contract pay?

An order for dozens of modules would, to be sure, transform NuScale's revenue line -- a business measured in billions of dollars, and the order book NuScale has spent two decades working toward. And the $1.9 billion of liquidity can likely cover that second payment.

But the terms shape how profitable that business can be. NuScale's filings say the milestones agreement includes "a negotiated maximum sale price" for each module delivered into an ENTRA1 project (a ceiling on pricing, set before any order exists). ENTRA1 also retains sole and full discretion to select, contract with, or purchase from NuScale.

My stance on this stock hasn't changed. I'd stay on the sidelines. A signed power purchase agreement would be a milestone for the industry, and the stock would likely rally on one. But it would also trigger a payment near $1.2 billion from NuScale to its partner, with module revenue arriving years later at a capped price. Before buying the stock at today's valuation, I'd want to see the terms of an actual module order -- what NuScale earns per reactor, not just when the reactors get built. Until then, the deal driving this stock belongs mostly to someone else.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.