X-energy and American Electric Power will study whether to build 12 small modular reactors at a retired coal site, and Amazon is paying for part of the work in stages. The developer's stock gave up most of an early 7% gain to finish 1.7% higher, while Piper Sandler lowered its target to $8. AEP slipped 1.9% on a weak day for utilities.
The announcement described 960 megawatts of nuclear capacity. The stock market valued it as a study.
X-energy and American Electric Power announced on Monday at 8:30 a.m. Eastern a joint development agreement "to advance feasibility work for a proposed 960 MW Xe-100 small modular reactor ('SMR') project in Indiana." The study covers a 12-reactor plant on AEP-owned land in Sullivan County, Indiana, where the Breed coal plant once operated.
Amazon will put up development money in stages, released as milestones are met. Indiana would be the second project in a partnership under which Amazon and X-energy aim to add more than 5 gigawatts of nuclear capacity by 2039; the first is a plant Energy Northwest is planning in Washington state. Should the plant be built, Amazon would buy its output under a long-term contract covering the plant's costs, Utility Dive reported. They gave no timetable and no dollar figure for Amazon's funding.
"Our agreements with Amazon and X-energy will provide all necessary capital protections and financial safeguards that we have said are essential for any potential nuclear project to move forward," AEP Chief Executive Bill Fehrman said.
The tape
X-energy shares closed Friday at $10.36. They opened Monday near $11.07, about 6.9% higher, reached about $11.10 and then slid as low as $10.21 before closing at $10.54, up 1.7%. By the close, about 75% of the early advance had disappeared, by this publication's arithmetic. Volume was about 9.1 million shares, roughly one and a half times the stock's three-month average.
The same morning, Piper Sandler cut its X-energy price target by a dollar, to $8, and reiterated an Underweight rating, so the stock was absorbing two pieces of news at once. Even after Monday's gain, the shares sit about 72% below their 52-week high of $37.10.
The comparison with other reactor developers was more flattering. Oklo fell 2.6% and NuScale Power 2.4%, leaving X-energy about 4 percentage points ahead of both.
Why the partners' stocks did not move on it
AEP fell 1.9% to $124.72, on a day when utilities and power producers were among the S&P 500's weakest stocks: NRG Energy fell about 4.2%, Eversource about 3.6% and Constellation Energy about 3%. Amazon rose about 5% after Morgan Stanley named it a top pick. For companies of that size, a study agreement that commits no disclosed capital is not a reason to trade.
What the agreement does and does not do
The announcement's own cautionary language allows that the study may not support going ahead, that the parties may not sign further agreements, and that Amazon's funding depends on milestones being met. No reactor order, no fuel contract and no signed power purchase agreement came with Monday's announcement.
What it does provide is a utility partner, a site with existing grid connections and a second project with the same well-funded customer. For a developer whose stock has fallen sharply since its listing, those reduce two of the risks investors worry about most, who will host the plant and who will pay for the power.
Market implications
One reading is that the deal validates X-energy's commercial model. A second Amazon-backed project, a utility partner that says the agreements will provide the protections it required, and volume well above average point to growing confidence in the pipeline.
A second reading is that it is too early to matter. The agreement covers feasibility, funding arrives only as milestones are met, no schedule exists, and the stock's fade from its open alongside a fresh Underweight call shows how heavily the market discounts early-stage nuclear announcements.
What to watch
X-energy's third-quarter report for any disclosure of the agreement's economics; any filing by X-energy or AEP describing terms; any filing with Indiana regulators; and whether a power purchase agreement is signed. A disclosed dollar amount for Amazon's development funding would give investors the first way to value the deal.