Dominion Energy recently signed a Memorandum of Understanding with Amazon.com to delve into cutting-edge development structures for enhancing Small Modular Reactor (“SMR”) nuclear development in Virginia. This strategic partnership aims to strengthen Dominion’s presence in the growing power demand market in Virginia by venturing into the uncharted territory of SMR technology.
This collaboration is poised to facilitate the promotion of SMR development and financing, mitigating risks to consumers and capital sources in terms of cost and development.
Navigating the Growing Demand for SMR Technology
As utilities, state and federal authorities, and leading technology firms explore SMR as a viable solution, reliable, carbon-free power becomes imperative to sustain the surging electricity demand in Virginia and across the U.S. Traditional nuclear energy, like SMRs, generates continuous carbon-free power but with a compact footprint and lower initial capital outlay.
In Virginia, where power demand is projected to double over the next fifteen years at an annual growth rate exceeding 5%, Dominion Energy is diversifying its power production sources. This includes investments in offshore wind, solar, battery storage, and natural gas, with SMRs expected to play a pivotal role in its energy mix by the 2030s. Against this backdrop, the recent MOU signifies Dominion Energy’s strategic move to solidify its position in the electric utility sector.
In July 2024, the company issued a Request for Proposals to explore the feasibility of developing a SMR at its North Anna Power Station in Louisa County, VA.
Growth Trajectory of Dominion Energy Stock
The development of SMRs reflects a global inclination towards integrating nuclear energy into the clean energy mix, driven by its cost-efficiency and adaptability. A Wood Mackenzie report from March 2024 reveals that the SMR project pipeline reached 22 gigawatts (GW) in the first quarter of 2024, requiring an investment of approximately $176 billion. This presents significant growth opportunities for utilities like Dominion Energy that are embracing SMR technology in their infrastructure. The collaboration with Amazon exemplifies Dominion’s proactive stance in this realm.
Another Player Tapping into SMR Market
Joining Dominion Energy in seizing the burgeoning SMR market is Ameren Corporation, which is pursuing SMR projects in collaboration with Westinghouse Electric Company. Notably, Ameren Missouri, a subsidiary of Ameren Corporation, is seeking funding from the U.S. Department of Energy for two SMR initiatives, including the construction of a Westinghouse SMR at Ameren Missouri’s Callaway Energy Center.
Ameren Corporation’s long-term earnings growth rate stands at 6.58%, with the Zacks Consensus Estimate projecting a 5.5% year-over-year increase in 2024 earnings per share (EPS).
Stock Performance of Dominion Energy
Over the past three months, Dominion Energy’s stock has surged by 18.1%, outperforming the industry’s 9% growth trajectory.
The Path Ahead
As Dominion Energy and Amazon embark on their collaborative journey towards SMR development, the energy landscape in Virginia undergoes a transformative phase. The integration of SMR technology promises a sustainable and efficient energy future, catering to the escalating power needs of the state amidst a dynamic market environment.
