8-K: NuScale Secures SMR Supply Deal with ENTRA1, Guarantees Payments

NuScale Power Corporation's subsidiary, NuScale Power LLC, entered a Partnership Milestones Agreement with ENTRA1 Energy LLC to supply SMR technology, backed by a corporate guarantee, involving significant milestone payments.

Summary

• NuScale Power, LLC (NuScale LLC), a subsidiary of NuScale Power Corporation, entered into a Partnership Milestones Agreement (PMA) with ENTRA1 Energy LLC (ENTRA1) on August 27, 2025.
• Under the PMA, NuScale LLC will serve as a key supplier of its Small Modular Reactor (SMR) technology equipment for future ENTRA1 energy projects, advancing their strategic relationship.
• NuScale LLC will provide a 'Partnership Contribution' in the range of USD$35,000,000 to USD$55,000,000 for each NuScale Power Module (NPM) allocated to contemplated ENTRA1 projects or power plants.
• This Partnership Contribution is disbursed in tranches upon the successful achievement of specific commercial and developmental milestones.
• Milestone 1 (15% of the Partnership Contribution) is paid upon the execution of a non-binding term sheet, memorandum of understanding, letter of intent, or framework agreement with a Third Party related to an Energy Project, applicable to a maximum of 72 NPMs at any given time.
• Milestone 2 (35% of the Partnership Contribution) is paid upon the execution of a binding power purchase agreement, energy off-take agreement, or similar documentation with a Third Party in connection with an Energy Project or NPM deployment, applicable to a maximum of 48 NPMs at any given time.
• Milestone 3 (50% of the Partnership Contribution) is paid upon the execution of an original equipment manufacturing agreement with NuScale LLC for NPMs or other binding purchase/deployment documentation.
• An initial payment for 72 NPMs, totaling a redacted amount, is due to ENTRA1 in three installments: 30% by a redacted date in 2025, 20% by a redacted date in 2025, and 50% by a redacted date in 2026.
• NuScale Power Corporation, the parent company, has provided an unconditional, absolute, and irrevocable guaranty for NuScale LLC's obligations under the PMA.
• The PMA has an initial term expiring on December 31, 2045, and automatically renews for subsequent twenty-year periods unless terminated with 12 months prior written notice.
• Milestone Contribution amounts will be adjusted annually (effective January 1st) based on the greater of five percent (5%) or the annual percentage increase in the U.S. Consumer Price Index for All Urban Consumers (CPI-U).
• NuScale has agreed to an all-inclusive sale price cap for each NPM, which is a redacted amount based on current 2025 pricing, subject to annual negotiation.

Sentiment

Score: 4

Explanation: While the agreement solidifies a strategic partnership and positions NuScale as a key supplier, the substantial financial commitments and the corporate guarantee represent a significant cash outflow and increased financial risk for NuScale. The payments to a partner, even if part of historical pricing, could be viewed as a burden on profitability and liquidity, especially given the redacted figures which prevent a full assessment of the magnitude.

Positives

• The agreement solidifies NuScale's strategic relationship with ENTRA1, positioning NuScale as a key supplier for future energy projects utilizing its SMR technology.
• The milestone-based payment structure provides a clear framework for revenue recognition tied to project development progress, potentially accelerating the commercialization and deployment of NPMs.
• NuScale's SMR technology holds a unique competitive advantage due to its Standard Design Approval from the United States Nuclear Regulatory Commission, which is acknowledged in the agreement.
• The partnership leverages ENTRA1's exclusive global commercialization, distribution, sales, and development rights for NuScale's products and services, potentially expanding market reach.

Negatives

• NuScale LLC is obligated to make significant 'Partnership Contributions' ranging from USD$35,000,000 to USD$55,000,000 per NPM to ENTRA1, representing substantial cash outflows to a partner.
• A large initial payment for 72 NPMs, totaling a redacted amount, is due to ENTRA1 in installments by a redacted date in 2026, creating a significant near-term financial burden.
• NuScale Power Corporation has provided an unconditional and irrevocable guaranty for NuScale LLC's obligations under the PMA, increasing the parent company's financial exposure and risk.
• The agreement includes a cap on the all-inclusive sale price for each NPM (a redacted amount), which could limit NuScale's revenue potential if costs escalate beyond the agreed-upon annual adjustments.
• Late payments by NuScale under the agreement will accrue interest at a rate of ten percent (10%) per annum, compounded monthly, indicating strict financial penalties.

Risks

• NuScale's liquidity and ability to raise capital.
• NuScale's ability to make payments under the Partnership Milestones Agreement and the Guaranty, and the timing thereof.
• Failure to receive new contract awards.
• Cost overruns, project delays, or other problems arising from project execution activities, including failure to meet cost and schedule estimates.
• Uncertainties regarding regulatory approvals and their timing to deploy SMRs in the United States and abroad.
• Changes in trade policy, including the imposition and effect of tariffs.
• Forecasts regarding end-user adoption rates and demand for products in new and rapidly evolving markets.
• Intense competition in the industries in which NuScale operates.
• Failure of partners to perform their obligations.
• Cyber-security breaches.
• Foreign economic and political uncertainties.
• Client cancellations of, or scope adjustments to, existing contracts.
• Risks or uncertainties associated with events outside NuScale's control, including weather conditions, pandemics, public health crises, political crises, or other catastrophic events.
• Macroeconomic conditions.
• Client delays or defaults in making payments.
• Failure of NuScale's supply chain, subcontractors, and other third parties to adequately perform services.
• Inability to hire and retain qualified personnel.
• Liabilities associated with the performance of nuclear services.
• Foreign currency risks.
• Loss of one or a few clients that account for a significant portion of NuScale's revenues.
• Damage to NuScale's reputation.
• Failure to adequately protect intellectual property rights.
• Asset impairments.
• Climate change and related environmental issues, and increasing scrutiny with respect to sustainability practices.
• Failure to obtain favorable results in existing or future litigation and regulatory proceedings, dispute resolution proceedings, or claims.
• Failure by NuScale or its employees, agents, or partners to comply with laws.
• New or changing legal requirements, including those relating to environmental, health, and safety matters.
• Failure to successfully implement strategic and operational initiatives and restrictions on possible transactions imposed by charter documents and Delaware law.

Future Outlook

NuScale anticipates the placement of NuScale Power Modules (NPMs) in future Energy Projects and expects to enter into original equipment manufacturing agreements with ENTRA1. The company believes its contributions will advance ENTRA1's Energy Projects and accelerate the deployment of NPMs globally.

Management Comments

• NuScale acknowledges ENTRA1's efforts, expertise, and strategic support and recognizes that, without ENTRA1's contributions, work, distinctive capabilities, and active involvement as a strategic partner, such opportunities would not have been available.
• NuScale acknowledges the substantial value generated through ENTRA1's contributions and that such contributions have materially advanced the commercial development, positioning, and success of bringing its technology to market.
• NuScale recognizes and acknowledges that although its technology has not yet been deployed or constructed at commercial scale, it remains the only SMR technology in the United States to have a Standard Design Approval from the United States Nuclear Regulatory Commission, thereby conferring upon NuScale a uniquely validated regulatory status and a competitive advantage in advancing first-of-a-kind nuclear projects.

Industry Context

This agreement solidifies NuScale's position as a key supplier in the nascent but rapidly developing small modular reactor (SMR) market. By partnering with ENTRA1, which holds exclusive global commercialization rights, NuScale aims to accelerate the deployment of its SMR technology, leveraging its unique U.S. NRC Standard Design Approval. This move reflects a broader industry trend of strategic alliances and partnerships to de-risk and scale up advanced nuclear technologies, particularly for first-of-a-kind projects.

Related Party Transactions

• NuScale and ENTRA1 established a joint venture entity, ENTRA1 NuScale LLC, on June 25, 2024, with each party holding a 50% membership interest, making ENTRA1 a related party to NuScale. The Partnership Milestones Agreement and Guaranty Agreement are dealings between these related parties.

Stakeholder Impact

• Shareholders: Potential for increased long-term revenue and market penetration through strategic partnership, but also significant near-term cash outflows and increased financial risk due to the corporate guarantee and milestone payments to a partner.
• Customers (future): Potential for accelerated deployment of SMR technology, offering a new energy solution.
• Employees: Continued work on SMR technology development and deployment.
• Creditors: Increased financial exposure due to the corporate guarantee of NuScale LLC's obligations.

Next Steps

• NuScale LLC to provide SMR technology equipment as a key supplier for future ENTRA1 energy projects.
• Disbursement of Partnership Contribution tranches upon achievement of commercial and developmental milestones (Milestone 1, 2, and 3).
• ENTRA1 to secure non-binding agreements, binding power purchase agreements, and original equipment manufacturing agreements with Third Parties for Energy Projects.
• NuScale and ENTRA1 to negotiate annual adjustments to the NPM Price.
• NuScale to make initial payments for 72 NPMs to ENTRA1 in installments by a redacted date in 2026.

Key Dates

Recommendation

While the Partnership Milestones Agreement solidifies NuScale's strategic position as a key SMR technology supplier and aims to accelerate deployment, the immediate financial implications are substantial. The commitment to pay ENTRA1 a significant 'Partnership Contribution' per NPM, coupled with a large initial payment for 72 NPMs and the parent company's unconditional guarantee, represents a considerable cash outflow and increased financial risk. These payments, even if historically accounted for in pricing, will impact NuScale's near-term liquidity and profitability. The long-term potential of SMR deployment is positive, but the financial burden and associated risks warrant a cautious approach. Investors should monitor the progress of ENTRA1's projects and NuScale's cash flow management closely before making a more definitive investment decision.

Keywords

NuScale Power, SMR, Small Modular Reactor, ENTRA1 Energy, Partnership Milestones Agreement, Nuclear Energy, Power Module, Energy Projects, Corporate Guaranty, Strategic Alliance, Commercialization, Nuclear Technology