Rolls-Royce Holdings PLC (LSE:RR.) shares rose to a new all-time high as it was selected by the UK government to build the country's first small modular nuclear reactors.
The engine maker's Rolls-Royce SMR arm was selected as a single preferred bidder to partner with Great British Energy's nuclear wing, the government confirmed on Tuesday morning, though the decision is still subject to final government approvals and a contract signature.
Over £2.5 billion has been pledged by the government for the overall SMR programme in the current spending period.
Great British Energy plans to allocate a site to build the first SMR later this year, it said, with the plant to be connected to the national electricity grid in the mid-2030s.
SMRs are being developed as a smaller and quicker alternative to traditional nuclear plants, though in a separate statement Energy Secretary Ed Miliband announced that most of £14.2 billion of spending on nuclear power has been allocated to build a new nuclear power station at Sizewell C in Suffolk.
Miliband said the UK is "entering a golden age of nuclear with the biggest building programme in a generation".
"Great British Energy - Nuclear has run a rigorous competition and will now work with the preferred bidder Rolls-Royce SMR to build the country’s first ever small modular reactors – creating thousands of jobs and growing our regional economies while strengthening our energy security."
Rolls-Royce SMR, which is part-owned by Qatar’s sovereign wealth fund, beat off competition from two US companies, Holtec and GE Hitachi.
While the government's original plan called for two winners to build four prototype reactors each, it had recently been reported that the Treasury preferred to back a single bidder, with analysts speculating that Rolls would come out on top.
Small nuclear: A cross-section view of Rolls' SMR design
Group chief executive Tufan Erginbilgiç said: "This is a very significant milestone for our business and Rolls-Royce SMR. It is a vote of confidence in our unique nuclear capabilities, which will be recognised by governments around the world."
Rolls-Royce SMR chief Chris Cholerton said the work with Great British Enerty will see three Rolls SMR units deployed, and he noted that, with a previous contract to build a plant in the Czech Republic, it is "the only SMR company with multiple commitments to build projects in Europe, testament to our differentiated design and compelling offer".
Shares in Rolls-Royce rose 2% to 905p, up over 700% in the past five years.