NuScale Power gets $40M Equity Investment from a Japanese Firm that Will Also Be Its EPC

NuScale Power announced April 5 on that it has completed an investment and strategic partnership agreement with JGC Holdings Corporation (JGC HD), a holding company of one of the world’s leading EPC contractor group companies headquartered in Japan.

As part of a commercial relationship with Fluor Corporation, NuScale’s majority investor and EPC partner in the United States, JGC HD will provide a $40 million cash investment in NuScale Power and partner with Fluor on the deployment of NuScale Power Plants.

It positions a key supply chain partner close to potential future customers in Asia seeking smaller, cheaper nuclear energy solutions compared to 1000MWE units being exported by Russia and China.

The Asia Nikki wire service reported that the deal involves a 3% equity stake in NuScale. However, a spokesman for NuScale declined to confirm that amount. In an email the firm said;

“We confirm the $40 million. The JGC investment results in JGC having a small minority interest in NuScale. We will not be disclosing the exact percentage at this time and cannot confirm the percentage identified in the Nikkei article.”

When asked if the deal involve any licensing of NuScale intellectual property to JGC Holdings, the spokesman said that no transfer of IP is included in the deal.

In response to a question about how the deal will work with Fluor being the majority investor and which also plans to do the engineering procurement and construction (EPC) work for NuScale in the US, NuScale’s spokesman would only say that JGC is an “EPC partner with Fluor.”

Fluor shed some light on the partnership with a statement that indicated the two firms have collaborated on major projects over the past decade.

“This new ownership stake and partnership with JGC is aligned with Fluor’s long-term strategy to bring aboard new strategic investors to NuScale as the U.S. and international demand for new carbon-free base-load energy grows,” said Alan Boeckmann, executive chairman, Fluor Corporation.

“Fluor has been collaboratively executing projects with JGC for more than 10 years and we believe JGC is an ideal partner for effectively bringing this innovative carbon-free energy transition solution to realization.”

These responses raise an interesting question. What is it that JGC brings to the table the Fluor does not have or which it does not want to commit, on the NuScale project?

A look at JGC’s website shows the firm has deep experience providing engineering services to Japan’s nuclear fleet and that may be one of the reasons for this deal.  In particular the firm promotes its experience with management of spent nuclear fuel.

For its part NuScale is positioning the news about the deal because it “signals the first commercial relationship and investment in NuScale Power from a Japanese-based company and is indicative of growing Japanese and global interest in NuScale’s groundbreaking small modular reactor (SMR) technology.”

“JGC HD’s investment and partnership with NuScale Power is a welcome endorsement of our SMR technology and its international viability,” said NuScale Chairman and Chief Executive Officer John Hopkins.

“NuScale looks forward to demonstrating how our cleaner and safer advanced nuclear technology can bring numerous benefits – economic and environmental – to countries around the world as they seek innovative solutions to complete a clean energy transition.”

Tadashi Ishizuka, Representative Director, President and COO of JGC Holdings Corporation, said in a press statement, “Our investment in NuScale technology, with its enhanced safety features, will enable JGC to expand our EPC business and deliver a zero carbon resource to the growing demands of the global energy market.”

According to the Nikkei report, “The partners eventually could set their sights on similar projects in the Middle East — where JGC boasts a long track record in oil and petrochemical infrastructure — and Southeast Asia.”

This blog also ask for confirmation of this part of the wire service report, which is whether NuScale and JGC have plans for joint export deals to Asian or Middle Eastern countries under the agreement or even new builds in Japan. It is important to note that Japan has no SMR type design available for export and nothing that is even close to one emerging from the r&d bench scale by the end of this decade.

NuScale’s spokesman said deal will support the firm’s plans for global export sales.

“We expect that Fluor and JGC will team on providing EPC service as part of delivering NuScale Plants in markets worldwide. We are excited about the prospect of being able to offer NuScale’s passively safe SMR technology to help Japan achieve its commitments to reduce carbon emissions. We look forward to being able to speak about specific deployments once we secure customer commitments.” ​​

And a spokesman for JGC echoed NuScale’s response. The firm said it is expanding its business in the nuclear-related sector in response to the ongoing global transition from fossil fuels to hydrogen and renewable energy.

“In the medium and long term, JGC Corporation will work with Fluor to secure and execute SMR EPC projects on a global basis, and intends to seek opportunities in integrating SMRs with renewable energy, as well as with hydrogen production and seawater desalinization.”

International politics may also play a part in the arrangement. Nikkei hinted that relations between the US and Japan will be enhanced by it. Fighting climate change will be on the agenda when President Joe Biden meets Japanese Prime Minister Yoshihide Suga for a summit in the U.S. later this month. President Biden is seeking help from Asian allies to counter China’s growing assertiveness in the region and Japan will play a key role in that effort.

The Asia Times reported on April 5 that when Prime Minister Yosihide Suga walks into the Oval Office of the White House on April 16, he will be the first foreign leader to meet President Joe Biden. The visit is reportedly intended to showcase the Biden administration’s central foreign policy goal – to challenge and encircle China.

“They all believe that to get China policy right, you have to get Asia right, and to get Asia right, you have to start with Japan,” said James Schoff of the Carnegie Endowment for Peace and a former Obama administration Japan expert who advised the Biden campaign in a statement to the Asia Times.

The deal with JGC is NuScale’s second contract with an offshore firm for key elements of its new build. Previously, NuScale inked a deal with Doosan Heavy Industries of South Korea.

On April 29, 2019, NuScale Power and Doosan Heavy Industries and Construction Co., Ltd. (Doosan) announced a $44M strategic cooperation to support deployment of the NuScale Power Module (NPM) worldwide. Doosan and its financial partners provided a cash investment in NuScale as part of this strategic relationship.

Doosan will supply long lead time components and other equipment. DHIC is expected to bring its expertise in nuclear pressure vessel manufacturing. Doosan also signed the ‘unit purchase agreement’ through which it will make a cash equity investment in NuScale with Korean financial investors. The terms of the equity deal were not disclosed but it will involve transfer of NuScale stock to Doosan.

The strategic cooperation between DHIC and NuScale is not limited to the USA, but will extend to global nuclear markets. DHIC and NuScale expect the value of equipment supplied through the contract will total at least S1.2 billion. Like the deal with JGC, the deal with Doosan is intended to place NuScale’s supply chain partners closer to future customers.

The US Nuclear Regulatory Commission in September 2020 issued a standard design approval to NuScale Power for the NuScale SMR. This allows the design to be referenced in applications for construction, operating and manufacturing licenses and permits in the USA. Site-specific licensing procedures must still be completed and a combined construction and operating license obtained before any construction can begin.

Fluor and NuScale are working with Utah Associated Municipal Power Systems in the development of a 720-megawatt plant that is to be built at a site at the US Department of Energy’s Idaho National Laboratory.

# # #