Fluor Corporation (FLR - Analyst Report) recently announced that its independently managed operating unit NuScale Power LLC has received funding for the development of its nuclear small modular reactor (SMR) technology from the U.S. Department of Energy (DOE). The total cost of developing the SMR technology is estimated to be around $452 million, 50% of which is expected to be covered by the DOE as per the five-year cost-sharing agreement.
DOE will be funding the engineering as well as design certification of the SMR technology that is designed to deliver an innovative, safer and reliable alternative for energy production. Additionally, it has a potential to scale up the production in tune with increased demands.
The development of SMR will require a number of competent manufacturers and supply chain partners. Apart from these, Fluor and NuScale are collaborating to consider the inclusion of new investors in the project and are in the process of evaluating the same.
Fluor has become a majority shareholder in NuScale after making an investment of more than $30 million in Oct 2011. As per the contract, NuScale retained its position as an independent entity. Fluor has exclusive rights for providing core services that include engineering and construction for the development of SMR technology and its upcoming facilities.
DOE had earlier funded the conception of this new technology at Oregon State University in 2000-2003. The technology has a promising potential that is likely to be augmented by the technical expertise of Fluor and timely funds from DOE.
Fluor currently has a Zacks Rank #3 (Hold). Some other better-ranked energy and utility stocks include VSE Corp. (VSEC - Snapshot Report), AO Smith Corp. (AOS - Snapshot Report) and EnerSys (ENS - Snapshot Report). All these three stocks carry a Zacks Rank #1 (Strong Buy).