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A group led by British engineer Rolls-Royce has won UK government backing to build the country’s first small modular nuclear reactors, in a step forward for the nascent technology but one that officials said did not go as far as hoped.
The consortium led by the FTSE 100 company has been selected as the only preferred bidder for state financial support to get small modular reactors off the ground in Britain.
Simon Bowen, chair of the government’s nuclear arm Great British Energy — Nuclear, said it marked a “huge step forward” for the industry, but added he would have liked to be able to back more than one reactor developer.
“It’s an affordability issue,” Bowen said in an interview with the Financial Times. “I’ve made no secret of the fact that I’ve always said we should do two for resilience and competitive tension, but the reality is we’re in a constrained fiscal environment. We’ve got one and that’s great news for the nuclear industry.
“Did we want two? Yes we did. Fiscally constrained. We’ll take one and make that work and build more Rolls-Royce reactors.”
Holtec, one of four bidders shortlisted alongside GE Hitachi, and Canadian-owned Westinghouse Electric, said it was “disappointed” not to be chosen as a preferred bidder and it would scale back plans for a factory in South Yorkshire as a result. Westinghouse Electric dropped out of the bidding earlier this year.
ČEZ Group, the Czech utility, has a 20 per cent stake in the Rolls-Royce SMR consortium as part of a wider strategic partnership between the two companies. Other backers include private investment vehicle BNF Resources, Constellation of the US and the Qatar Investment Authority.
The government funding for Rolls-Royce, which is still subject to final agreements, involves support to help develop three small modular reactors amounting to almost 1.5 gigawatts of electricity capacity, enough for about 1.5mn homes.
The consortium has so far invested about £280mn, and has secured £210mn of UK government funding to help Rolls-Royce’s SMR design through the regulatory assessment process.
It comes as the government also announced £11.5bn of new state funding for the planned 3.2-gigawatt Sizewell C nuclear plant in Suffolk, as it tries to foster a revival of atomic power in Britain despite years of setbacks.
The government said it would pledge £2.5bn to small modular reactors during this three-year spending review period, helping to develop Rolls-Royce’s technology as well as develop sites for the reactors.
It would then award contracts to build the power plants. Any private investors would recoup their money through a levy on consumer energy bills.
SMR is a catch-all term for a planned new breed of relatively small nuclear power plants, parts of which can be built off-site.
Proponents say their size and modular construction mean it should be possible to build them with fewer of the delays and cost blowouts that have dogged larger models. But critics caution that there is so far no certainty that these benefits will materialise.
At roughly 480 megawatts each, Rolls-Royce’s pressurised water SMRs are larger than many similar designs. The company estimates that the first unit in the UK will cost between £2bn-£3bn to build. But it expects the unit cost to fall progressively as more reactors are built.
When the contest was first announced in 2024, then energy minister Grant Shapps indicated up to £20bn of government funding could be spent supporting potentially two developers.
Although the initial agreement with the government is just for three units, Sir Stephen Lovegrove, chair of Rolls-Royce SMR, said the company expected to build more for the UK and elsewhere.
Rolls-Royce has been chosen to build enough reactors to be able to generate up to 3GW of electricity for the Czech Republic and the company is also one of two remaining bidders in a competition in Sweden.
Rolls-Royce plans to build a SMR factory in the UK. Lovegrove told the FT that “clearly supply chain issues are very much front and centre in the next phase between now and 2029 when the final investment decision is made”.
While he was “confident” that Britain had the “capability to play the part that we need it to play . . . I doubt that every single last component of the SMR will be UK sourced,” Lovegrove added. Rolls-Royce has, for example, picked Germany’s Siemens to provide the reactor turbines.
“We will go for best athlete wherever it is located,” said Lovegrove.
Proponents argue SMRs will have a key role to play in powering data centres for technology groups. Amazon and Google are among companies that have recently struck deals with SMR developers.
