Listing of NuScale Power to Benefit Other Related Plays

The authors are analysts of NH Investment & Securities. They can be reached at jinmyung.choi@nhqv.com and minjae.lee@nhqv.com, respectively. -- Ed.

 

Debate is underway over whether nuclear power is a form of green energy

Energy ministers from 10 European countries (including France) have released a joint statement emphasizing the significance of nuclear energy and proposing nuclear power as green energy. But this statement has prompted criticism from European countries that have phased out nuclear power. These developments show that having previously been predominantly against nuclear power, Europe’s stance is changing.

Debate is vibrant over nuclear power policy in run-up to presidential election

In Korea, in the run-up to the presidential election, eyes are on if the country will stick to its nuclear phase-out policy. Over the past five years, construction of new NPPs (NPPs) has been suspended, and nuclear power has been excluded from the Green Taxonomy. However, policy change is likely depending upon the outcome of the upcoming election, given that presidential hopefuls from opposition parties are advocating NPP construction.

SMRs emerging as new alternative to traditional nuclear power

A renewed interest in nuclear energy has boosted market interest in small modular reactors (SMRs) as a new alternative to traditional nuclear power technology. While opinions about traditional nuclear power generation vary widely by country and by ruling and opposition party, they are all uniformly favorable towards SMR technology. This development stems largely from rising expectations that SMR technology can help significantly reduce the risks involving nuclear power generation.

SMR technology needs to be proven over next decade

Over the next decade, a number of experiments and massive investments are to be made on SMRs. Globally, more than 72 SMR models are currently under development. NuScale Power, acquirer of the world’s first US SMR design certification, is to be listed on the US stock exchange in 1H22 in order to secure funding for experiments and construction costs for a SMR-based power plant.

Listing of NuScale Power to benefit other related plays; suggest DHIC as promising play

In the stock market, we draw attention to DHIC and KEPCO E&C among domestic plays, and Fluor in the foreign markets. DHIC and Fluor are among major shareholders of NuScale Power, the first player in the world to construct a SMR plant. In particular, in return for its equity investment in 2019, DHIC is promised of a priority vendor status of materials and equipment for NuScale Power’s five projects. This means that DHIC could generate profits even from NuScale’s pilot projects. We also point out that the number of SMR materials and equipment plays is somewhat more limited than that for SMR developing companies. DHIC’s solid track record built on NuScale’s projects should serve positively for the firm to become a vendor for other SMR models in the future. 

Copyright © BusinessKorea. Prohibited from unauthorized reproduction and redistribution