Rolls-Royce Poised to Sell Stake in Mini-Nuclear Power Stations Venture

As the race to deploy small modular reactor (SMR) technology in Britain intensifies, Rolls-Royce finds itself at the forefront of this transformative endeavour. The FTSE 100 engineering giant is now considering selling a stake in its SMR venture to raise fresh funding and accelerate its progress towards becoming the first company to implement this groundbreaking technology in the UK.

Tufan Erginbilgic, the chief executive of Rolls-Royce, revealed that the company is engaged in discussions with potential investors regarding its SMR business. To date, approximately £280m has been invested in the venture by current backers, including Rolls, BNF Resources, Constellation, and the Qatar Investment Authority. Additionally, the company has secured £210m in grant funding from the Government. However, with funds expected to be depleted by early next year, Rolls and its fellow backers are exploring options to inject more capital, potentially through selling equity to outside investors or a combination of both.

Sources familiar with the discussions suggest that Rolls-Royce SMR aims to raise hundreds of millions of pounds, likely based on a valuation of at least $2bn (£1.6bn), which is on par with its US rival NuScale. The company has garnered interest from a diverse range of investors, including infrastructure investors, clean energy funds, hedge funds, and other nuclear power companies. While no concrete talks with outside investors have taken place yet, the growing interest in the business has been fuelled by Rolls’ emergence as the unofficial frontrunner in the Government’s SMR design competition, run by Great British Nuclear (GBN).

The GBN competition is set to select two viable designs before awarding contracts next year for the construction of the first demonstrator SMRs at yet-to-be-announced sites. These SMRs are expected to come online in the early 2030s. Rolls-Royce has also made significant strides towards regulatory approval, becoming the first SMR developer to enter the third and final stage of the generic design assessment process conducted by the Office for Nuclear Regulation (ONR). The assessment is expected to be completed by the end of 2026.

Mr Erginbilgic expressed confidence in the attractiveness of Rolls-Royce’s SMR proposition and its promising future, which has caught the attention of potential investors. He emphasised the importance of the UK maintaining its first-mover advantage in SMR technology and the critical role it plays in retaining skilled engineers in Britain. The Rolls-Royce-designed SMR, if realised, has the potential to drastically reduce the cost and construction time of nuclear power plants. Each SMR would have a price tag of £2bn to £3bn initially and generate up to 470 megawatts (MW) of electricity, representing about half the cost per MW of the Hinkley Point C nuclear power station currently under construction in Somerset.

According to Mr Erginbilgic, SMRs present an “enormous” export opportunity for the UK, with the potential to host as much as 60% of the supply chain if it becomes a leader in the technology. Securing a contract from the Government would be a pivotal step, likely to unlock orders from other countries. As the global demand for small modular reactors continues to grow, Rolls-Royce SMR finds itself in a prime position to capitalise on this decarbonisation opportunity, attracting investor interest and considering various options to support its future growth.