Coming on top of two other important announcements from Rolls-Royce this week – one that contracts have been signed at CIE with Chinese partners and customers from power generation, C&I, mining and rail industries as the company continues its growth course in China and 2. that the company and cellcentric, a joint venture company set up with Daimler Truck AG and Volvo Group, are taking the next step in their strategic cooperation for the deployment of cellcentric hydrogen fuel cell modules. Rolls-Royce, through its power systems business unit is to develop complete mtu hydrogen fuel cell solutions based on cellcentric’s fuel cell modules that emit nothing other than water, is another important announcement from the company and one that not only confirms the increasing role that Rolls-Royce nuclear technology will be playing in the battle against climate change but also how advanced the company already is in one of the most crucial and fast growing technology areas in the UK.
The announcement from Rolls-Royce this morning states that, following a successful equity raising, it has now established Rolls-Royce Small Modular Reactor (SMR) in order to bring forward and deliver, at scale, the next generation of low cost, low carbon nuclear power technologies. .
The announcement confirmed that Rolls-Royce Group, BNF Resources UK Limited and Exelon Generation Limited are to invest £195m over a period of approximately three years and that in addition, the new funding arrangements confirmed will enable the business to secure grant funding of £210 million from UK Research and Innovation funding – a scheme that was first announced by the UK Prime Minister, Boris Johnson within what is termed as ‘The Ten Point Plan for a Green Industrial Revolution’.
The announcement from Rolls-Royce today marks another big step forward in the delivery of the ten-point plan but also for the UK’s overall ‘net zero strategy’.
Rolls-Royce said that “while the new business will continue to seek further investment, the plan is that it will now proceed rapidly with a range of parallel delivery activities, including entry to the UK Generic Design Assessment (GDA) process and identifying sites for the factories which will manufacture the modules that enable on-site assembly of the power plants. The company also said that discussions will continue with the UK Government on identifying the delivery models that will enable long-term investment in this vital, net-zero enabling technology”.
Rolls-Royce SMR is engaging with export customers across many continents who need this type of technology in order to meet their own net zero commitments. Commenting on the announcement, Warren East, Rolls-Royce CEO said, “the SMR programme is one of the ways that Rolls-Royce is meeting the need to ensure the UK continues to develop innovative ways to tackle the global threat of climate change. With the Rolls-Royce SMR technology, we have developed a clean energy solution which can deliver cost competitive and scalable net zero power for multiple applications from grid and industrial electricity production to hydrogen and synthetic fuel manufacturing” adding that “the business could create up to 40,000 jobs, through UK deployment and export enabled growth. As a major shareholder in Rolls-Royce SMR, we will continue to support its path to successful deployment.”
Rolls-Royce SMR is using proven nuclear technology, coupled with a unique factory-made module manufacturing and on-site assembly system, to harness decades of British engineering, design and manufacturing knowhow. It brings together the best of UK industry to ensure a decarbonisation solution that will be available to the UK grid in the early 2030s. The potential for this to be a leading global export for the UK is unprecedented.
Nine-tenths of an individual Rolls-Royce SMR power plant will be built or assembled in factory conditions and around 80% could be delivered by a UK supply chain – a unique offering in energy infrastructure in the UK. Much of the venture’s investment is expected to be focused in the North of the UK, where there is significant existing nuclear expertise.
A single Rolls-Royce SMR power station will occupy the footprint of two football pitches and power approximately one million homes. It can support both on-grid electricity and a range of off-grid clean energy solutions, enabling the decarbonisation of industrial processes and the production of clean fuels, such as sustainable aviation fuels (SAF) and green hydrogen, to support the energy transition in the wider heat and transportation sectors.
The move is an extremely important one for the UK government with Business and Energy Secretary Kwasi Kwarteng saying
“This is a once in a lifetime opportunity for the UK to deploy more low carbon energy than ever before and ensure greater energy independence. Small Modular Reactors offer exciting opportunities to cut costs and build more quickly, ensuring we can bring clean electricity to people’s homes and cut our already-dwindling use of volatile fossil fuels even further. In working with Rolls-Royce, we are proud to back the largest engineering collaboration the UK has ever seen – uniting some of the most respected and innovating organisations on the planet. Not only can we maximise British content, create new intellectual property and reinvigorate supply chains, but also position our country as a global leader in innovative nuclear technologies we can potentially export elsewhere. By harnessing British engineering and ingenuity, we can double down on our plan to deploy more home-grown, affordable clean energy in this country.”
Paul Stein, Chief Technology Officer, Rolls-Royce and Chairman of Rolls-Royce SMR commented, “In establishing this business, Rolls-Royce, BNF Capital and Exelon are taking leadership in accelerating our path to a future without fossil fuels. Global decarbonisation has never been more important, and we bring decades of precision manufacturing, and nuclear experience to the problem, adding to the skills of our partners. By deploying SMRs in the UK and overseas we will be making a significant contribution to decarbonisation. While the decarbonisation of the electricity grid is vital, I am particularly excited by the use of SMRs to synthesise net zero fuels which can be used to power Rolls-Royce engines.”.
Ralph Hunter, Chief Operating Officer of Exelon Nuclear Partners and Vice President of Exelon Generation commented, “As the largest producer of emissions-free energy in the U.S., Exelon helps customers and communities meet their environmental and economic goals. This partnership exemplifies our commitment to investing in clean energy technologies that will create a more sustainable future. We believe that small modular reactors could become a crucial part of the world’s clean energy mix and we are confident that, as an operational partner, we can help develop, deploy and operate a fleet of world-class SMRs.”
Sean Benson, Director of BNF Capital Limited commented, “BNF has an established history of energy market investing and we are proud to be a part of Rolls-Royce SMR in this exciting opportunity. Following reviews of numerous proposals, we found that this project, featuring a highly experienced team was the most realistic, affordable and scalable solution for provision of carbon-free baseload and alternative power requirements.”
Separately, Tom Samson, CEO, Rolls-Royce SMR, said: “Today’s announcement is fantastic news. Rolls-Royce SMR has been established to deliver a low cost, deployable, scalable and investable programme of new nuclear power plants. Our transformative approach to delivering nuclear power, based on predictable factory-built components, is unique and the nuclear technology is proven. Investors see a tremendous opportunity to decarbonise the UK through stable baseload nuclear power, in addition to fulfilling a vital export need as countries identify nuclear as an opportunity to decarbonise. The capitalisation of Rolls-Royce SMR takes us a step closer to achieving a unique, and most importantly investable, proposition in nuclear energy. It is a major vote of confidence in British nuclear technology and the potential for building a world-leading domestic supply chain.”
CHW (London – 9th November 2021)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785