Britain has taken a crucial step towards creating a fleet of mini reactors that would reduce reliance on Chinese money and nuclear technology after Rolls-Royce secured investment to build the world’s first production line.
A consortium led by the FTSE 100 engineer has secured at least £210m needed to unlock a matching amount of taxpayer funding, which will make it the first “small modular reactors” (SMR) developer to submit its designs to regulators.
It is understood heavyweight financial investors specialising in energy are now thrashing out the final details of their backing to drive work on the so-called “mini nuke” power plants.
State support for SMRs – which each generate about 450 megawatts, about a seventh of the output of conventional nuclear power stations such as Hinkley Point – was revealed in the Prime Minister’s ten-point plan for a green industrial revolution released in the autumn.
New nuclear has been described as vital in ensuring the Government achieves its net-zero emissions target by 2050, and as a good way to help Boris Johnson achieve his levelling-up agenda.
It comes as the Government prepares curbs on Chinese involvement in critical national infrastructure as relations between London and Beijing deteriorate.
China General Nuclear is a minority investor Hinkley and is lined up as a backer for other future UK nuclear plants.
This combined with the cost of Hinkley which has spiralled from £16bn to £23bn has prompted the Government to reassess the viability of SMRs.
Rolls believes the project could create 40,000 new jobs in regions including Midlands and the North of England by 2050, with plans to install at least 16 plants at existing and former nuclear sites.
Tom Greatrex, chief executive of the Nuclear Industry Association, said: “This is very positive news for the UK nuclear industry. SMRs must play a critical role in our clean energy transition and can open new export markets worth billions of pounds.
“To realise this potential, however, the Government needs to establish a siting and policy framework by next year to enable the deployment of a fleet of SMRs and capture the promise of a net zero future.”
Although officials are engaging with other businesses on SMRs, one Whitehall source described the Rolls-led consortium as “by far the most advanced”. The UK SMR consortium also includes the National Nuclear Laboratory and Laing O’Rourke, the construction firm.
Ministers are expected to push for the Office for Nuclear Regulation to prioritise assessment of the consortium's SMR design, while simultaneously driving the planning process to get potential sites.
Sites being targeted for SMRs, which each take up the space equal to about two football pitches, a fraction of the size of a conventional plant, are understood to include disused nuclear sites around the country currently in the care of the Nuclear Decommissioning Authority.
Tom Samson, chief executive of UK SMR, said the consortium offered a “transformational clean energy solution. We are in the process of securing the funding that will enable the next phase of the SMR development.”
The consortium estimates it will cost £2bn to get to the stage where it can start constructing the first SMR.
Getting the first five operating is expected to cost £2.2bn apiece, with the first hoped to be up and running in the early 2030, but prices will then fall to £1.8bn per plant.
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A government spokesman said: “While the Government is committed to supporting the advancement of large, small and advanced nuclear reactors, we can’t comment on specific commercial discussions at this stage.”
Proving SMRs as practical sources of emissions free energy will not only be key to the UK’s net zero target, but could also be a huge money spinner for the country if Britain can perfect the technology first. The global market for SMRs has been estimated as being a potential £450bn.
Rolls has been hammered by the pandemic as demand for its jet engines for airliners collapsed in the face of travel restrictions.
In March the FTSE 100 company posted a £4bn annual loss and revenues almost £4bn lower at £11.7bn.
All 10,000 staff in Rolls’s UK civil aerospace business are on two weeks’ unpaid leave as a cost-saving measure with the business in a temporary shutdown.
Analysts expect the interim results on Thursday to show that Rolls’ forecasts for a recovery of the jet engine market were overly optimistic.
In March, the company said it expected demand for its engines this year to be at 55pc of pre-coronavirus levels but warned in May that it was at just 40pc.