Rolls-Royce wins pioneering deal to build mini nuclear plants in Czech Republic

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Rolls-Royce is on course to secure the first order from a European government to build a fleet of mini nuclear reactors after being selected as the preferred supplier in a competition overseen by the Czech government.

The UK aerospace and defence group beat six other rivals to seal the agreement with state utility ČEZ Group, it said on Wednesday.

Chris Cholerton, chief executive of the company’s small-modular reactor business, said the “landmark” partnership would “further strengthen” Rolls-Royce’s position in Europe’s market to build the small facilities.

Governments around the world are interested in the potential for small-modular nuclear reactors to provide a reliable electricity supply to meet rising demand without generating carbon emissions.

Cholerton said the deal would put ČEZ, Rolls-Royce SMR and its existing shareholders “at the forefront” of SMR deployment. 

Talks are still under way to finalise contractual terms and the agreement remains subject to regulatory clearance, but people familiar with the situation said the deal could generate billions of pounds worth of export orders for UK industry. The first reactor is planned near the South Bohemian Temelín nuclear power plant, and is likely to be built in the mid-2030s.

The Czech government said in a statement that the project would “help modernise the Czech energy industry and open up new opportunities for the domestic industry”. It said it expected local companies to play a significant role as Rolls-Royce was “just forming its supply chain”.

Rolls-Royce’s small-modular reactor design, which will have a 470 megawatt generating capacity, is relatively large for the type. They are generally 300MW capacity or less.

Governments hope their scale and modular design mean SMRs can be built without the budget overruns and delays that have beset large-scale nuclear-power projects in recent years. However, according to a report this year from the intergovernmental Nuclear Energy Agency, only three designs are currently in operation. They are in China and Russia, while there is a test reactor in Japan.

The Rolls-Royce deal with the Czech government could be an important test of whether the technology can provide the hoped-for benefits.

Rolls-Royce is one of five companies still involved in a government-run competition to win government support to build small-modular reactors in the UK. Rolls-Royce is competing alongside GE-Hitachi, Holtec, Nu-Scale, and Westinghouse Electric.

EDF, France’s state-owned energy giant, was also on the list but pulled out of the competition earlier this year to continue developing its Nuward design. 

The competition, launched last year under the then Conservative government, is running behind the initial schedule to award contracts by the summer of 2024.

Applicants are now expected to learn by the end of this month how many of them will go forward to the next stage of negotiations. 

In its manifesto ahead of its victory in July’s general election, the Labour party said the technology would play “an important role” in the UK’s energy security. 

While “small-modular reactors” can cover a range of different designs, those in the UK’s competition are based on established nuclear technology using water cooling systems.