A Rockville nuclear energy company that planned to go public last year ultimately opted not to, a decision that set the stage for a $500 million investment from Amazon.com Inc. and other key investors a year later.
In November 2023, X-energy Reactor Co. LLC called off its $1.8 billion SPAC deal with Ares Management Corp. last November, citing "challenging market conditions."
But CEO J. Clay Sell told me X-energy at the time was in conversations with Amazon (NASDAQ: AMZN), which was looking to find novel solutions to provide sustainable, clean electricity for its growing data center business. X-energy's development of small modular reactors, or SMRs — smaller, cheaper and faster-to-build nuclear power plants — caught Amazon's interest.
"When we were in that process, we engaged with Amazon because they were, quite frankly, interested in our technology," he said. "They ultimately advised us that if we went public via SPAC, they were not interested in investing and eventually, we concluded under the leadership of our chairman, that it was not something we wanted to do."
Calling off the SPAC deal required X-energy to negotiate the termination of its binding agreement with Ares. Both sides eventually reached a mutual agreement that avoided the termination fee often required for broken SPAC deals.
Just days after the SPAC termination announcement, Sell got a call from an investment team at Amazon. Talks resumed.
Then, on Oct. 16 during a nuclear investment event at its Arlington headquarters, Amazon announced it led X-energy's $500 million Series C funding round, one of the largest investments to date for a tech company looking to back nuclear energy development.
X-energy also scored funding from Ken Griffin, the CEO and founder of Chicago hedge fund Citadel LLC; Dallas investment firm NGP; and the University of Michigan. The affiliate of Ares that organized X-energy's SPAC deal also brought capital into the funding round, the same it fronted for the original SPAC deal, Sell said.
Amazon is funding a joint venture with X-energy and Washington state utility Energy Northwest to develop a four-unit, 320-megawatt SMR project on less than 30 acres in central Washington. That project could receive additional investment from Amazon to scale the SMR up to a 12-unit, 960-megawatt site over 75 acres. Traditional nuclear plants could encompass thousands of acres.
The tech giant is also in the early stages of exploring a similar effort with Dominion Energy Virginia.
Sell said the equity investment from Amazon and the others will go toward finishing design work and obtaining licensing requirements from the Nuclear Regulatory Commission so its SMR project underway on the Texas Gulf coast can come online by the end of the decade. If successful, that project will become the first commercial-ready SMR development in the nation.
X-energy hopes to replicate it as part of its effort with Amazon and Energy Northwest. Funding is also being used to help build X-energy's nuclear fuel production site in Oak Ridge, Tennessee, which is expected to be ready by late 2027.
X-energy employs 406 people and won't generate revenue until later this decade, Sell said. He expects to try to take the company public again someday as well.
"Sometimes the obstacle that you fear is actually the opportunity that you find, and we turned that obstacle of the negative SPAC markets into something really great for our company," he said. "When we return to the public markets, we'll do it through a regular way — IPO — sometime in the next few years."
Clarification: An earlier version of this article miscommunicated the reason X-Energy didn't go public via SPAC in 2023. The decision was made based on market conditions, according to the company.
