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As SMR developer X-energy moves to go public, merger partner Ares cautions investors about risks

Utility Dive Stephen Singer, Editor, Jan. 27, 2023

Dive Brief:

  • The partner in a merger with a small modular nuclear reactor developer going public has cautioned investors that changing markets and a “limited operating history” may ultimately be unfavorable to the business.

  • Ares Acquisition Corp., a special purpose acquisition company, warned in an S-4 filing with the U.S. Securities and Exchange Commission Wednesday of “limited operating experience for reactors of this type, configuration and scale” that could lead to higher than expected construction costs, maintenance requirements, operating expenses or changes in the timing of delivery. X Energy Reactor Co. announced the merger in December.
  • The market for SMRs generating electric power and high-temperature heat is not yet established and “may not achieve the growth potential we expect or may grow more slowly than expected,” Ares said. It’s backed by private equity firm Ares Management Corp.

Dive Insight:

The S-4 filing, which provides a preliminary proxy statement and spells out details of the renamed X-Energy business and market risks, provides boilerplate cautions to investors who require transparency and discussion of as many potential risks as possible. It highlights challenges in a still-emerging industry. The U.S. Nuclear Regulatory Commission on Jan. 19 certified NuScale Power’s SMR design, the first of its type to win federal approval………………………………

Ares said the market for SMRs, and particularly for SMRs using advanced nuclear technologies such as those employed in the Xe-100 — an 80 MWe reactor that can be scaled into a ‘four-pack’ 320 MWe power plant — has not yet been established. SMRs using advanced nuclear technologies have not been proven at scale, it said……………………..

Ares also warned that it may not attract customers for its SMR technology — a “relatively new and unproven technology” — as quickly as it expects, “or at all,” and acquiring customers may be more expensive than it currently anticipates.

In addition, Ares said the time and funding needed to bring X-energy’s nuclear fuel, TRISO-X, to market at scale may “greatly exceed” expectations………………….

Critics of SMRs have raised issues nearly identical to what Ares cited, calling out the reactors over the projected cost and time needed for siting and other approvals.

“Small modular reactors may be viable one day, but they are not today, will not be tomorrow and may never make as much economic sense as renewable sources of electricity,” the Institute for Energy Economics and Financial Analysis says. “We should stick to carbon-free energy sources that make financial and environmental sense.”………. more


January 29, 2023 - Posted by | business and costs, Small Modular Nuclear Reactors, USA

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