Nuclear power startup NuScale is facing investigation by lawyers after a short-seller’s report alleged that it has sold 24 reactors to a “fake customer.”
NuScale announced a deal earlier this month to supply blockchain firm Standard Power with 1,848MW of power provided by 24 of NuScale’s small modular reactors (SMRs), to power two US data center sites.
Last week its share price dropped around 10 percent after a scathing report from short seller Iceberg Research claimed that the deal, estimated at $37 billion, had “zero chance of being executed.” The shares bounced back around six percent earlier this week, when NuScale responded, saying the Iceberg claims were “riddled with speculative statements with no basis in fact.”
NuScale has contracted to provide Standard Power with 1,848MW of power, but Iceberg predicts Standard Power will be unable to support the contract. Among other things, Iceberg points out that Standard Power’s CEO Maxim Serezhin has an outstanding $54k tax warrant in New York, rendering his assets vulnerable to seizure, adding that a former Standard Power leader, Adam Swickle, was found guilty of securities fraud in 2003.
The Standard Power deal is massively bigger than NuScale’s only other contract, with the government-backed Carbon Free Power Project (“CFPP”) to provide Utah Associated Municipal Power Systems (“UAMPS”) with 462MW, and is also bigger than Standard Power's other major deal, a 200MW contract for nuclear power at Shippingport Pennsylvania.
Iceberg says NuScale has “around 15 months before its cash runs out,” and says the UAMPS contract is reaching a crucial stage, claiming: “NuScale has been given till around January 2024 to raise project commitments to 80 percent or 370 MWe.”
Iceberg also cast doubt on NuScale’s commercial partner Entra1, saying it was set up in 2021 to finance NuScale reactors, has only one employee, and was “very unlikely to be able to finance even a portion of this contract."
NuScale said it “will not engage in a point-by-point rebuttal of every falsehood,” but issued statements on several points, saying that NuScale has a “solid balance sheet,” and that US Department of Energy (DOE) support for the CFPP “has advanced our SMR technology to the point of commercialization.”
DOE support has been a key factor in NuScale’s development, helping it bring nuclear power down to a commercial price point, however, the price of nuclear electricity from its projected plans has been creeping up, from an initial estimate of $55 per MWh to around $90 per MWh, making it less competitive.
Iceberg suggests that NuScale may not be able to fully deliver without further support from the US government, which it says will “dilute” shareholder value. NuScale went public with a SPAC in May 2022.
Lawyers investigating NuScale on behalf of investors over “possible violations of federal securities laws," include Howard G. Smith, which issued a press release this week, and Rosen Law Firm, which is planning a class action lawsuit. These releases are classed as “attorney advertising."
Overall shares in NuScale have fallen around 75 percent since their peak in late 2022, from around $14 to around $3.5.
