An Analysis of the Collapse of the NuScale Project and Its Implications for Romania’s Energy Industry

“Once you’re riding a dead horse, you get off quickly. That’s how things work around here,” John Hopkins, CEO of NuScale, told Bloomberg on 8 November 2023, as the company announced the cancellation of the Carbon Free Power Project (CFPP), developed in partnership with Utah Associated Municipal Power Systems (UAMPS).

What do we Romanians do? We persist. We are determined to mount the deceased horse ourselves. NuScale’s own CEO dismounts to make room for us in the saddle. Or perhaps, from Hopkins’ perspective, the dead horse was merely the project’s financier.

LinkedIn News journalist Polly Dennison invited me to answer the question: How can countries increase employment in the renewable energy sector?

I had already assembled a comprehensive research framework based on current geopolitical developments, an analysis of Josep Borrell’s statements regarding the European economic framework over the past two years, voting patterns at the United Nations, and recurring accusations of “double standards”. However, in light of today’s promise-filled statements from Romanian officials, coupled with Monday’s parade of dignitaries through Doicești, I decided to bring my response forward.

You may well ask what press promises and a procession of VIPs who dusted off their shoes in Doicești, Dâmbovița, on Monday, 18 March 2024, have to do with LinkedIn News’ question about increasing employment in the renewable energy sector.

Against the backdrop of recent revelations and legal actions targeting a company that has promised countless SMRs and made history by delivering absolutely nothing despite consuming US$9.3 billion per project, a bleak picture emerges — one of incompetence and questionable manoeuvring that threatens the country’s energy future. Today, that country is Romania. In November 2023, the Americans had already drawn their conclusions.

On 26 January 2024, nuclear energy analyst Dan Yurman highlighted the lack of competitiveness of the NuScale-UAMPS project, with significant implications for the export prospects of the VOYGR technology to Romania, Poland and Indonesia — all price-sensitive markets.

On 31 January 2024, M.V. Ramana, global security expert and professor at the University of British Columbia in Vancouver, Canada, argued that the collapse of NuScale’s US project should mark the end of Small Modular Reactors (SMRs).

In a rational world, no utility company or government would invest another penny in these theoretical reactor concepts.

Meanwhile, in Doicești, Dâmbovița, anticipation continues to build around the proposed nuclear power station, expected to open within the next six years and supposedly deliver prosperity and security to the local community. The same familiar image is once again being circulated — a rendering of the project that swallowed more than US$9 billion in the United States and was never completed. We are told by the authorities that “the world is simply jealous and malicious”, while the public is being misled.

Is that really the case?

I invite you to judge for yourselves.

NuScale rendering presented at the launch of the Utah project.

November 2023 News USA

NuScale rendering presented for the Doicești project.

On Monday, 18 March 2024, the event “Energy for the Next Generation” took place in Doicești, Dâmbovița County. It was organised by Romania’s Ministry of Energy in partnership with the National Nuclear Power Company Nuclearelectrica and RoPower Nuclear.

Among those attending were US Ambassador to Romania Kathleen Ann Kavalec, Minister of Energy Sebastian Burduja, Nuclearelectrica CEO Cosmin Ghiță, RoPower CEO Melania-Simona Amuza, and E-Infra Deputy Group CEO Gianina Pelea.

Cosmin Ghiță stated that the SMR implementation project at Doicești remains at a very early stage. A pre-feasibility study is currently underway, with a full feasibility study to follow.

“The timely deployment of SMR technology will contribute to Romania’s energy security and decarbonisation objectives while generating significant socio-economic benefits, including approximately 4,000 jobs during the development phase, increased public revenues, and participation in regional projects,” Ghiță said.

The mayor of Doicești noted that the subject has been surrounded by misinformation and that residents no longer know what to believe.

“There are concerns, as there are with every investment, whether large or small. Naturally, there are both supporters and opponents. At present, the balance appears to tilt somewhat towards those opposed to the project, largely because certain individuals misled the public when the first reports appeared in the media. They claimed buildings would be demolished, pollution would increase, the national road would disappear, and a nearby factory would be shut down — none of which is true,” said Doicești Mayor Stana Cosmin Petruț.

A Brief NuScale Timeline

August 2020 – NuScale’s SMR receives design approval from the United States Nuclear Regulatory Commission (NRC), becoming the first and, to date, only SMR to achieve this milestone. Encouraging news, were it not for the sequence of ill-conceived and disastrous decisions that followed.

July 2021 – The NRC publishes the proposed rule for NuScale’s design certification, a crucial step towards deployment.

December 2021 – NuScale rebrands its SMR portfolio and officially launches the VOYGR name, together with the flagship VOYGR-12 scalable power plant design.

26 April 2022 – NuScale signs an agreement with three South Korean multinationals: Samsung C&T Corporation, Doosan Enerbility and GS Energy Corporation.

3 May 2022 – NuScale completes its merger with Spring Valley Acquisition Corp, creating what it describes as the world’s first and only publicly traded SMR technology provider. A union intended to foster innovation and growth, yet already shadowed by signs of poor management and questionable decision-making.

The company’s grandiose press release announced the creation of an entity valued at approximately US$1.9 billion. Whether that valuation reflected reality remains open to debate, and alarm bells had already begun ringing among attentive observers.

Nevertheless, the merger generated substantial capital inflows, including approximately US$380 million in gross proceeds and US$235 million in investor equity.

Existing investors, including Fluor, Doosan Enerbility and Samsung C&T Corporation, transferred their holdings into the newly formed company.

19 October 2023 – Iceberg Research publishes a report throwing the entire enterprise into turmoil. NuScale is accused of making false claims regarding its ability to fulfil two major contracts. The company’s share price falls sharply as investors scramble to limit their losses.

26 October 2023 – Howard G. Smith Law Offices announces an investigation into potential violations of US federal securities laws by NuScale.

27 October 2023 – A short-seller report drops another bombshell. Standard Power, NuScale’s commercial partner, and its CEO Maxim Serezhin, a Russian national, are described as a “fictitious customer”.

8 November 2023 – The termination of the CFPP agreement between NuScale and UAMPS is announced. NuScale’s share price collapses, leaving investors nursing substantial losses.

1 December 2023 – Law firm Kirby McInerney LLP announces a class action lawsuit against NuScale Power Corporation, alleging false and misleading statements. Investors claim they were deceived and are now seeking redress through the courts.

On 3 January 2024, we witnessed a new wave of grand declarations regarding the deployment of SMRs across Europe by the end of the decade. Project Phoenix was presented as a shining promise for Europe’s energy future, claiming it would accelerate the rollout of SMRs throughout the region.

The initiative was championed by John Kerry, the United States Special Presidential Envoy for Climate, who pledged support for SMR deployment across Central and Eastern Europe, with Romania and the Czech Republic placed centre stage.

Initial enthusiasm was tempered, however, by criticism that Europe remained disadvantaged in the nuclear race due to the European Commission’s long-standing ambivalence. Nevertheless, emerging EU legislation supportive of SMRs appeared to signal a change of direction.

On 9 January 2024, NuScale announced sweeping redundancies affecting 28 per cent of its workforce. The company justified the move as necessary to improve its commercial and financial position following the collapse of its critical agreement with UAMPS for the Idaho SMR project.

On 26 January 2024, Dan Yurman again highlighted the lack of competitiveness of the NuScale-UAMPS project, warning of significant consequences for VOYGR export opportunities in Romania, Poland and Indonesia. All three markets are highly sensitive to electricity prices and are expected to scrutinise offers from NuScale and competing SMR developers very carefully.

On 31 January 2024, M.V. Ramana argued that the failure of the NuScale project should effectively spell the end of Small Modular Reactors. He stressed that the financial problems and cost escalation observed in this case are not unique to NuScale but are likely to affect any SMR project. In a rational world, no utility company or government would invest another penny in such theoretical reactor concepts.

The estimated cost of the UAMPS project rose from US$4.2 billion in 2018 to US$6.1 billion in 2020, before ultimately reaching US$9.3 billion in 2023, despite the project’s capacity being reduced to 462 MW in 2021.

The engineers and accountants involved were either profoundly unrealistic about probable costs, or NuScale preferred to break the bad news gradually regarding the scale of the eventual bill. Perhaps both.

NuScale also managed to retain support by advertising extraordinarily low electricity costs once the project became operational — figures derived using opaque economic methodologies with little transparency regarding the assumptions involved.

These projects represent yet another missed opportunity for the nuclear industry and merely add another data point to the long history of cost overruns and delays associated with nuclear energy developments.

High capital costs inevitably translate into expensive electricity. In April 2023, financial advisory firm Lazard estimated the levelised cost of electricity from newly constructed nuclear power plants in the United States at between US$141 and US$221 per megawatt-hour.

By comparison, a newly built utility-scale solar installation, equipped with modest energy storage to provide power after sunset, was estimated to generate electricity at an unsubsidised levelised cost of between US$46 and US$102 per megawatt-hour.

Small Modular Reactors suffer from a fundamental economic disadvantage. Their smaller output — typically under 300 MW per unit compared with roughly 1,000 MW for conventional large-scale reactors — means lower revenue generation for operators, while construction costs are not proportionally reduced.

Engineers refer to this principle as economies of scale.

Measured in terms of cost per megawatt of generating capacity, SMRs and the electricity they produce are likely to remain more expensive than the energy generated by large nuclear plants currently under construction.

In a rational world, no utility company or government would invest another penny in these theoretical reactor concepts.