Rolls-Royce Holdings PLC (LSE:RR.) has been talking up the promise of its small modular reactors for years.
Now, with plans firming up and government support edging closer, the company thinks its compact nuclear plants could start generating power by the middle of the next decade.
At an investor teach-in this week, Rolls-Royce Small Modular Reactors (SMR) boss Chris Cholerton and his team outlined the latest progress.
The group’s design, a 470-megawatt third-generation reactor, is based on established pressurised water reactor technology, the same kind used in large-scale nuclear plants. That makes it a bet on proven engineering rather than futuristic experimentation.
The idea behind modular reactors is straightforward: build most of the components in a factory and assemble them on site.
Rolls says this should shorten construction times and cut costs, particularly by avoiding weather-related delays.
The company is also standardising the full power plant design, not just the reactor itself, which could simplify deployment in countries with different regulatory regimes.
So far, Rolls SMR’s pipeline includes projects in the UK and Czech Republic, amounting to about 4.5 gigawatts of potential capacity.
The firm sees scope for up to 15 units in the UK alone, with further opportunities in Europe and the US as governments look to triple nuclear capacity by 2050.
Globally, it is targeting 30 orders by the end of the decade and hopes to reach a steady production rate of two reactors a year by the mid-2030s.
The financial outlines are modest but promising. Each unit should cost in the low single-digit billions of pounds and, UBS says, could deliver high single-digit margins.
The projects are expected to turn cash positive around 2030 as customer deposits start to flow. Aftermarket revenues, ongoing maintenance and servicing, will be limited but add a little cream on top.
Rolls-Royce owns a 55% stake in the SMR venture, alongside investors including the Czech utility CEZ, Qatar’s sovereign wealth fund and Constellation Energy.
There’s no plan for a separate listing, and UBS is keeping its £13.50 price target and “buy” rating unchanged.
If all goes to plan, Rolls-Royce’s nuclear side project could yet become a cornerstone of its next growth cycle — and a rare British export with global reach.
In afternoon trading, the shares were off 2% at 1,142.5p.