Powering up Rolls-Royce nuclear plans: Hunt pledges to pump more money into mini-power plants
Rolls-Royce has received a boost from Jeremy Hunt’s plans to invest more money in mini nuclear power stations.
The Chancellor has promised to co-fund “exciting new technology” if it works.
FTSE 100-listed Rolls led a UK program to design small modular reactors (SMRs), which have become a key pillar of the UK’s energy strategy.
Increased funding: Rolls-Royce led a UK program to design small modular reactors, which have become a key pillar of the UK’s energy strategy
The government has now launched a selection process that will determine which design and company can be used to build a reactor fleet this year.
Although that means Rolls could lose to a rival, the government has already invested £210m in its scheme – called Rolls-Royce SMR – which is expected to be the favourite.
Hunt’s decision came as he rebranded nuclear power as ‘environmentally friendly’ and launched a public body, Great British Nuclear (GBN) to oversee the industry.
The Chancellor wants a quarter of the UK’s electricity to come from nuclear sources by 2050.
Changing the way nuclear is categorized means pension funds and asset managers, who are under pressure to make green investments, can invest billions in power plants.
Winning the selection process would be a boon for Rolls, which has struggled for years and is being overhauled by boss Tufan Erginbilgic, who joined in January. Its main source of income has long been manufacturing and servicing aircraft engines, but that has been hit by the coronavirus pandemic.
Its SMR design is based on the nuclear reactors it supplies to British submarines. The plants would cost around £1.8bn each and supply power to 45,000 homes.
As most parts are assembled in factories, ‘flatpack’ power stations can be built much faster and more cheaply than major projects such as Sizewell C, which is estimated to cost £20bn.
Rolls-Royce SMR boss Tom Samson said it was the only such technology “going through the UK regulatory process”.
Samson added: “Rolls-Royce SMR has called for rapid progress from the government and we welcome the adoption of this principle.”
Hunt said ministers’ “initial” focus will be on narrowing down the small reactor programme, meaning any decisions on large sites are likely to be delayed until the end of this year or 2024.
Hinkley Point C, which is over budget and well behind schedule, is under construction and the only other site under discussion is Sizewell C in Suffolk.
Hunt gave few details about GBN, such as its budget and powers, although this is expected to be included in an energy strategy to be unveiled in the coming weeks.