NuScale Power May Sign a Deal That Will Change Everything for SMRs -- Here's Why

NuScale Power (NYSE: SMR) is a nuclear energy stock specializing in small modular reactors, or SMRs. There has been a surge of interest in SMRs in recent years, given their status as a potential antidote to the AI industry's rapidly rising energy needs.

SMRs are essentially miniature nuclear power plants that can be built faster and at a lower upfront cost than traditionally sized nuclear reactors. At least, that's what SMR developers are claiming.

"No developers outside China and Russia have yet completed a commercial version of what's known as a small modular reactor, or SMR," warns The Wall Street Journal. So how the SMR space evolves and whether the industry's cost and efficiency gains can be validated in real life remain to be seen.

NuScale Power's upcoming catalyst could energize the entire SMR industry

Uncertainty surrounding the industry's fate has weighed heavily on SMR stocks. NuScale's stock price has fallen by more than 40% in 2026. The uncertainty stems from several factors.

First, as The Wall Street Journal stresses, only two SMR systems are currently active worldwide. We still don't know whether these systems will ever see mass adoption.

Second, the industry has already faced massive contract failures. In 2023, for example, NuScale experienced a major project cancellation, forcing one industry analyst to predict that the "collapse of NuScale's project should spell the end for small modular nuclear reactors."

Finally, SMR stocks like NuScale and Oklo Inc. (NYSE: OKLO) have never turned a profit. Negative cash flows are expected to continue in the near future, putting the financial viability of these businesses in question.

Lifting these uncertainties would go a long way in revitalizing the stock prices of major SMR developers like NuScale and Oklo. Fortunately, a catalyst that could relieve some of the uncertainty could be on the way by the end of 2026.

Image source: Getty Images.

Last September, NuScale's financing partner, ENTRA1, partnered with the Tennessee Valley Authority -- a major U.S. utility -- to build a 6-gigawatt SMR system. If built, it would be the largest in the world. Why, then, have NuScale shares fallen by 75% since the announcement? Because of the aforementioned uncertainty. The market seemingly doesn't buy that this system will ever be built. That's a fair assumption given NuScale's past failures.

A power purchase agreement (PPA) would dramatically change market sentiment. PPAs are legally binding agreements that commit a customer to buying power from a facility at a preset price, often for years or decades to come. If a PPA is signed, NuScale can be assured of future revenue, and thus can begin project construction. NuScale's CFO hopes to have a PPA finalized by the end of this year.

A PPA would likely buoy NuScale's stock price. With proof that customers are willing to legally commit large amounts of capital, it would also send confidence throughout the rest of the SMR industry. The signing of this PPA could, in hindsight, be seen as a major catalyst for the long-term adoption of SMR systems.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.