Rolls-Royce courts investors for mini nuclear plants

A consortium led by Rolls-Royce that is hoping to build a fleet of mini nuclear power stations across Britain is talking to investors to secure £300m in funding as it prepares to submit its design to regulators later this year.

The consortium, which also includes Jacobs and Laing O’Rourke, hopes to be the first “small modular reactor” developer to put its design through the UK’s rigorous nuclear regulatory assessment.

The process is expected to take up to four years but would keep the companies on track to complete their first 470MW plant by the early 2030s, which would be capable of generating enough low-carbon electricity for about 1m homes.

UK prime minister Boris Johnson backed SMRs as part of his 10-point plan for a “green industrial revolution” last year. The technology is viewed within the government as a good way to create manufacturing jobs as well as delivering on Johnson’s “levelling up” agenda.

Rolls-Royce believes at least 16 SMRs could be installed at existing and former nuclear sites in Britain and more could potentially be built at locations such as former coal mines. It estimates the programme could create as many as 40,000 jobs in the UK regions by 2050.

Proponents of SMRs say they are a more affordable alternative to large-scale reactors such as the 3.2GW plant under construction at Hinkley Point C in Somerset, which is expected to cost up to £23bn. The smaller scale and modular construction of SMRs should avoid the cost overruns that have plagued the construction of large reactors, although nuclear industry executives argue both small and large plants will be needed to meet the UK’s 2050 net zero emissions target.

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Environmental groups say the technology is unproved and point out that nuclear energy leaves behind a legacy of waste, the most toxic of which takes at least 100,000 years to decay

The prime minister has promised £215m in public funds, which the consortium hopes will help it secure the £300m in private match funding needed for the project to progress.

Rolls-Royce, which has been working on SMRs since 2015, expects the first five reactors to cost £2.2bn each, falling to £1.8bn for subsequent units.

It has argued that its design, which uses pressurised water reactors similar to existing nuclear power stations and boasts an increased generation capacity from 440MW previously, is more commercially viable and lower-risk than rival plans. The company has also claimed it could compete with renewable technologies such as offshore wind.

Cross section of an SMR
Cross section of an SMR © Rolls-Royce

Tom Samson, chief executive of the Rolls-Royce-led consortium, said “the way we manufacture and assemble our power station brings down its cost to be comparable with offshore wind at around £50/MWh”.

But Tom Burke, chair of climate change think-tank E3G, argued that SMRs could not achieve economies of scale unless developers secured a large number of orders. “How are you going to get orders for 16 of an unproven reactor type and if you don’t have orders for 16 how are you going to build a factory?”

If sufficient private funding is secured, the consortium intends to set up a special purpose vehicle this summer in which Rolls-Royce is expected to retain a significant interest.

The programme could give Rolls-Royce an important new revenue stream as it looks to reduce its exposure to the commercial aerospace sector, which has been severely dented by the coronavirus pandemic.

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