A day after it announced the completion of the sale of its civil nuclear instrumentation & control (I&C) business, Rolls-Royce (RR.) confirmed that its small modular nuclear reactors (SMRs) have finally received government backing in the UK.
The announcement had been widely foreshadowed in the press, but it’s no coincidence that it took place as Glasgow’s COP26 summit entered its final week. The creation of the engineering group’s SMR business was made possible through a £195m cash injection from private companies (BNF Resources and Exelon Generation), together with a £210m grant from the government. Nothing is set in stone beyond the regulatory phase, during which time the technology’s suitability for deployment in the UK will be assessed.
It’s estimated that each SMR, assuming they’re brought into production, will cost about a tenth of the cash needed to build a conventional reactor and could theoretically supply enough power for around one million homes. Some perspective is needed. Glasgow, Britain’s third-largest city by population, had 292,619 households in 2018, according to the National Records of Scotland.
Rolls-Royce stressed that the lion’s share of the parts will be sourced in the UK and that the mini-reactors could eventually be used “to power net zero hydrogen and synthetic aviation fuel manufacturing facilities”.
All good stuff on the face of it, but it’s nailed on that further significant government funding and/or incentives will need to be put in place if the new consortium is to make good on plans to roll-out the first SME by 2031, by which time around half of the UK’s existing nuclear power supply will have been decommissioned.
Unfortunately, budgets and timelines for large-scale engineering projects rarely tally with initial estimates. The good news is that Rolls-Royce has been building small reactors to power Royal Navy submarines for the past 60 years, so it will be able to adapt existing technologies. The group believes it will be able to keep a lid on costs through the deployment of a factory-made module manufacturing and on-site assembly system; pre-fabrication in a nutshell.
Shareholders in the Derby-based engineering group have been through the mill, as global airline fleets were grounded by the lockdowns, even as it got to grips with the remedial work on its flagship Trent 1000 engine. Indeed, the group deserves credit for reducing the number of aircraft grounded by the engine issue from a peak of 44 to zero in record time. Nonetheless, the dual-outage is reflected in a group balance showing negative shareholder funds halfway through the year, and industry analysts do not anticipate a return to pre-pandemic civil aviation volumes prior to 2023.
Few UK firms were hit harder by Covid-19, but beyond the SMR programme, Rolls-Royce is also developing ways to decarbonise the aviation industry. Little wonder, then, that management is embracing the net-zero credo.
