Nuclear power startup NuScale is facing investigation by lawyers following a short-seller’s report which alleged that NuScale has sold twenty-four small modular reactors (SMRs) to a “fake customer”.
Earlier this month NuScale announced a deal to supply blockchain firm Standard Power with one billion eight hundred and forty-eight million megawatts of electricity. Twenty-four NuScale SMRs will be needed to power two U.S. data center sites.
Last week, NuScale’s share price dropped about ten percent after a scathing report from short-seller Iceberg Research which claimed that the thirty seven billion dollar deal had “zero chance of being executed.” The share price bounced back about six percent earlier this week after NuScale responded to Iceberg’s report. NuScale said that the Iceberg claims were “riddled with speculative statements with no basis in fact.”
NuScale has contracted to provide Standard Power with one billion eight hundred and forty-eight million megawatts of electricity. However, Iceberg predicts that Standard Power will be unable to support the contract. Iceberg points out that Standard Power’s CEO Maxim Serezhin has an outstanding fifty-four thousand tax warrant in New York. This renders his assets vulnerable to seizure. Iceberg added that Adam Swickle, a former Standard Power leader, was found guilty of securities fraud in 2003.
The Standard Power agreement is huge compared to NuScale’s only other contract, with the government-backed Carbon Free Power Project (“CFPP”) to provide Utah Associated Municipal Power Systems (“UAMPS”) with 462MW. It is also much bigger than Standard Power’s other major deal, a two-hundred-megawatt contract for nuclear power at Shippingport, Pennsylvania.
Iceberg claims that NuScale has about fifteen months before its cash runs out. Iceberg added that the UAMPS contract is reaching a crucial stage. “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. Entra1 was set up in 2021 to finance NuScale reactors. However, it only has one employee and was “very unlikely to be able to finance even a portion of this contract.”
NuScale said that it “will not engage in a point-by-point rebuttal of every falsehood.” It did issue statements on several of Iceberg’s points, saying that NuScale has a “solid balance sheet,” and that the U.S. 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, assisting it to bring nuclear power down to a commercial price point. However, the price of nuclear electricity from its projected plans has been slowly increasing. It has risen from an initial estimate of fifty-five dollars per megawatt hours to around ninety dollars per megawatt hour.
Iceberg suggested that NuScale may not be able to fully deliver without further support from the U.S. government. This would “dilute” shareholder value. NuScale went public with a special-purpose acquisition company (SPAC) in May of 2022.
Lawyers investigated NuScale on behalf of investors over “possible violations of federal securities laws.” Howard G Smith issued a press release this week and Rosen Law Firm is planning a class action lawsuit. These releases have been classified as “attorney advertising.”
Overall shares of NuScale have fallen about seventy five percent since they peaked in late 2022, from about fourteen around three dollars and fifty cents.