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Move Over, Nuscale Power: This Little-known Energy Stock Could Be A Better Buy In 2025
The artificial intelligence (AI) industry is rapidly transforming technology, and with this evolution comes a surge in energy demand.
As AI advances and its uses multiply -- including applications in healthcare, finance, transportation, and manufacturing -- the need for reliable, sustainable energy solutions intensifies. To address this growing concern, companies are pursuing scalable, renewable energy sources that can support their expanding needs.
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With global energy demand continuing to rise, some are turning to nuclear energy. One company that has attracted interest is NuScale Power (NYSE: SMR), which focuses on small modular reactors (SMRs) that could potentially transform how nuclear energy is deployed.
Interest in NuScale and similar SMR companies is high, but widespread implementation remains a way off. Some experts don't see this technology being deployed until the 2030s. That timeline raises questions about how we can effectively meet energy needs in the near term.
This is where Bloom Energy (NYSE: BE) enters the conversation. With its fuel cell technology, Bloom is positioned as an emerging energy provider that can meet near-term needs. The company recently secured a significant agreement that could lead to larger contracts, which resulted in a remarkable 186% increase in its stock in November. Here's why it could be a better buy than NuScale in 2025.
Bloom's fuel cells can help tech companies address energy needs today
Bloom's solid-oxide fuel cell technology provides reliable, low-carbon energy and microgrid solutions for customers. Its Bloom Energy server, a solid-oxide fuel cell power generator, operates off various fuels, including natural gas, biogas, and hydrogen. It can provide power on-site with fewer emissions.
The company's product is appealing because it can address energy needs today, not years from now. Its fuel cell technology can be deployed in as little as 50 days and can supplement energy currently supplied by the grid.
The company received significant news on Nov. 14, when American Electric Power signed an agreement with Bloom Energy to purchase up to 1 gigawatt (GW) of solid-state fuel cells for its data centers. American Electric plans to use these fuel cells for commercial and industrial applications, and the agreement is "a potential game-changer for Bloom," according to investment researcher Morningstar. American Electric has ordered 100 megawatts (MW) of fuel cells as part of the agreement and plans to ramp up its orders in 2025.
Image source: Bloom Energy.
Advances in nuclear energy technology will take longer to develop
In comparison, the nuclear energy market will take a while to develop. Small modular reactor technology is still in its infancy, and NuScale has some hurdles to clear before commercializing its product.
For one, it still needs regulatory approval. The company has already received standard design approval (SDA) for its 50 MWe modular reactors. However, to make it more economical, it had to upsize its reactor design to 77 MWe.
Its larger SMR has not received its SDA approval, although management expects approval on this version by the middle of 2025. Even so, this wouldn't be a full certification of its technology, which is projected to take another couple of years.
Last year, NuScale scored a big win when it agreed with Standard Power to develop two facilities in Ohio and Pennsylvania powered by its SMR technology. NuScale plans to offer 24 units of 77 MWe modules, which will produce 1,848 MWe of energy from both sites. However, these facilities likely won't be operational until 2029 at the earliest.
Keep an eye on Bloom Energy in 2025
Energy demand rapidly increases as AI advances. Companies are scrambling to meet this growing need, which has paved the way for innovative, up-and-coming companies to emerge as potential energy providers.
NuScale's cutting-edge technology will take years to hit the market. On the other hand, Bloom Energy's solid-oxide fuel cell is ready to deploy today, and its recent agreement with American Power is a huge win that could lead to more deals in 2025.
Investing in Bloom Energy and NuScale Power carries risks, as both companies have heavily invested in research and development with minimal revenue generation at this stage. That said, Bloom Energy is a little further along and can meet growing demand today, giving it more near-term upside than NuScale over the next few years.
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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
