GE Vernova's Strategy for Small Nuclear Reactors in the Developed World

• The BWRX-300 small modular reactor from GE Vernova could contribute to the growth of nuclear power in the next ten years.
• By the mid-2030s, GE's small reactor business aims to generate over $2 billion in annual revenue.
• By 2035, the company anticipates demand for up to 57 small reactors in its target markets in the U.S., Canada, the United Kingdom, and Europe.
• GE Vernova is also attracting interest from major tech companies in addition to its active conversations with utilities to build an order book.

The company plans to deploy small nuclear reactors in developed countries over the next decade, positioning itself as a leader in a burgeoning technology that could help meet rising electricity demand and lower carbon emissions.

GE Hitachi's nuclear unit, GE Vernova, has a small modular reactor (SMR) that aims to lower the cost of constructing new nuclear power plants, as stated by Nicole Holmes, the chief commercial officer.

GE Vernova, a spinoff of General Electric's former energy business, has experienced a more than doubling of its stock value since listing on the New York Stock Exchange in April. Investors view the Cambridge, Mass.-based company as a crucial player in the future of the power industry due to its diverse portfolio of divisions, which encompass nuclear, natural gas, wind, and carbon capture.

The US government aims to triple nuclear power by 2050 to strengthen the electric grid facing increasing power demand. However, large-scale nuclear projects in the US are often associated with multi-billion dollar budgets, cost overruns, delayed construction schedules, and even cancellations.

""Throughout the years, nuclear power has faced affordability challenges, but now we are starting to overcome them," Holmes said to CNBC."

Simpler design

The BWRX-300, a SMR designed by GE Vernova, has a simpler structure with fewer components and less concrete and steel compared to a larger nuclear plant, according to Holmes. The reactor might cost between $2 billion and $4 billion to construct, compared to $10 billion to $15 billion for a large nuclear plant, Holmes said.

The plant produces 300 megawatts of electricity, which is enough to power over 200,000 American households. On average, each reactor in the U.S. fleet has about 1,000 megawatts of power, enough to power over 700,000 homes. The smaller size of the plant provides more flexibility in terms of its location, she stated.

"You can deploy four of these on a site and achieve the same output as a single large reactor, allowing you to start earning money while building out others. This provides a lot of flexibility," the executive stated.

GE Vernova aims to generate over $2 billion in annual revenue from its small reactor business by the mid-2030s, which is significantly higher than its total revenue of $33.2 billion last year. The company expects demand for up to 57 small reactors in its target markets in the U.S., Canada, the United Kingdom, and Europe by 2035.

According to a research note from Bank of America in October, GE Vernova needs to ship between three to four reactors annually to meet its revenue target. The company can capture a 33% market share in its target markets, as stated by the bank.

"Holmes stated that a strong order book is being built in the target markets, with many buyers in the early stages being utilities."

GE Vernova is conversing with significant tech corporations, which Holmes declined to specify, that are increasingly expressing interest in nuclear energy to fulfill the electricity requirements of their AI data centers.

"Holmes stated that he is conversing with numerous big tech companies and observes a significant amount of interest from them in new nuclear technology as a potential solution to their energy demands."

North America deployments

In March 2023, GE Vernova collaborated with Ontario Power Generation, Tennessee Valley Authority, and Synthos Green Energy in Poland to invest $500 million in the BWRX-300 reactor, with the aim of commercializing it.

To achieve a standardized reactor design for GE Vernova's target markets, it is necessary to deploy a single nuclear plant design across all sites, as stated by Holmes.

Holmes stated that they are developing a plant that can be used in various locations and regulatory frameworks while remaining the same fundamental plant. She added that their collaboration partners are assisting them in meeting these requirements.

Kenneth Parks, the Chief Financial Officer of GE Vernova, stated on the company's Oct. 23 earnings call that there is increasing demand to increase capacity at existing nuclear power plants by adding small modular reactors.

GE Vernova secured the first commercial contract in North America to deploy a small modular reactor for Ontario Power in January 2023. This project marks the first commercial deployment of an SMR not only in North America but also in the developed world, as described by Holmes.

In 2029, the reactor will be launched in Darlington, located on Lake Ontario, approximately 60 miles east of Toronto. Eventually, Ontario Power plans to deploy three more BWRX-300 reactors at Darlington.

The Tennessee Valley Authority (TVA) is considering constructing a BWRX-300 at its Clinch River site, which is located near Oak Ridge National Laboratory in the United States.

In 2019, TVA was granted the first early site permit in the country by the Nuclear Regulatory Commission for a small modular reactor at Clinch River. The company has already allocated $350 million for the project, though its board has not yet made a final decision on whether to construct a reactor.

TVA is considering small reactors due to the lower financial risks associated with them compared to large 1,000 megawatt or 1 gigawatt reactors, according to Scott Hunnewell, vice president of TVA's new nuclear program.

"Interest expenses increase significantly when construction timelines for gigawatt-scale plants extend beyond eight years, driving up costs, according to Hunnewell's statement to CNBC. On the other hand, SMRs have lower risk and represent a smaller investment opportunity."

TVA is already acquainted with the boiling water technology of the BWRX-300, as it operates three large GE boiling water reactors at its Browns Ferry site that utilize the same fuel as the BWRX-300.

"GE Hitachi is a known quantity," Hunnewell said.

The four companies, GE Vernova, Ontario Power, TVA, and Synthos Green Energy, will collaborate to share their experiences and optimize the construction process by deploying reactors, according to Holmes.

TVA plans to share its experience with small reactors with any utility that is interested in learning from it, potentially benefiting companies not part of the team, Hunnewell said.

Tech sector interest

The tech sector is becoming increasingly important in the revival of nuclear power in the U.S., where utilities have traditionally been the primary customers.

In October, Amazon and Alphabet's Google invested in small nuclear reactors, signing a 20-year power purchase agreement with the Three Mile Island nuclear plant outside Harrisburg, Pennsylvania, to provide long-term financial support and revive the plant.

Instead of constructing and operating their own nuclear plants, tech companies are purchasing dedicated power from utilities to support the deployment of new reactors.

Large tech companies could serve as off-takers for utilities looking to deploy additional capacity, agreeing to power purchase prices that support the deployment of early units and technologies, according to Holmes.

Small nuclear reactors will be a "tremendous demand driver" for tech companies' growing power needs due to their artificial intelligence data centers, the executive stated.