Rolls Royce Raises £405M for its 16 Unit fleet of 470Mwe PWRs

The Financial Times, London, reports that an industry consortium led by Rolls-Royce, the British government, will jointly pump £405M (USD$546M) into the development of a fleet of mini-reactors as part of a new push into nuclear power designed to help the government meet its net zero carbon targets. (Rolls Royce press release)

Rolls Royce is working on a 470 MWe PWR type design. It plans to build a fleet of 16 of them in the UK and also offer the design for export. The Rolls Royce plan could represent a significant competitive challenge to other nuclear reactors vendors, both full size and for SMRs, with its jump start for funding its proposed fleet.

Rolls-Royce told the newspaper it secured funding from Exelon Generation in the US and in Europe from privately held BNF Resources, an investment vehicle backed by members of France’s wealthy Perrodo family and owner of oil group Perenco. The three partners will invest a total of £195m in a new business over the next three years. Rolls-Royce was advised on the equity process by Eversheds Sutherland and HSBC.

The private sector investments will trigger a commitment of £210m from the government, which is due to be announced by business secretary Kwasi Kwarteng on 11/09/21. Kwarteng said: “This is a once in a lifetime opportunity for the UK to deploy more low-carbon energy than ever before and ensure greater energy independence.”

UK Prime Minister Boris Johnson backed the new technology under development as part of his 10-point plan for a “green industrial revolution” released last year.

Other western nations, including the US and France, are also pursuing their own SMR technologies for use in their domestic markets as well as a new source of exports. For instance, SMR developer NuScale of the US announced at the COP26 conference in Glasgow last week that it had struck a deal to build small-scale reactors in Romania.

Emmanuel Macron, president of France, allocated €1bn of government funds last month to help the state-backed utility EDF develop its own SMRs by early next decade. France also plans to seek export opportunities for its SMR.

Regulatory Reviews

Rolls-Royce and its partners will use the initial funding to put its SMR design through the UK’s rigorous nuclear regulatory regime the generic design assessment which is managed by the UK Office of Nuclear Regulation. The process is expected to take up to four years. It would keep the consortium on track to complete its first 470MW plant by the early 2030s.

Supply Chain Developments

Rolls Royce says that cost competitiveness for the their design is based on the fact that its “modular design” would allow the parts to be built in factories ready for quick assembly at each site making them cheaper than the much larger reactors. Rolls-Royce estimates 16 SMRs could be installed at operational and decommissioned nuclear sites in Britain. As part of the development phase it will also identify possible factory manufacturing sites for its reactors.

According to a press statement, the firm claims 90% of an individual Rolls-Royce SMR power plant will be built or assembled in factory conditions and around 80% could be delivered by a UK supply chain.

This plan might be an opportunity for creation of a third party plant to make the large forgings needed for the reactor pressure vessel and other commercial plants to manufacture the steam systems’ components and non-nuclear components like turbines, switchyard gear, etc.

The group told the Financial Times the new venture will continue to seek further backers. It said it was in talks with a potential fourth investor, which would raise the consortium’s commitment from £195m to £250m. Other companies, including Jacobs of the US and the UK’s Laing O’Rourke, which were previously named as part of the consortium, would become supply chain partners. That list is expected to grow as the firm gets closer to breaking ground for its first of a kind unit.

The company has previously said it expects the first five SMR reactors to cost £2.2bn each, falling to £1.8bn for subsequent units. It estimates that the program could create as many as 40,000 jobs in the UK regions by 2050.

Nuclear Industry Supports the Investments

Reuters reported that the nuclear industry was very pleased with the investments.

“(It) sends a huge signal to private investors that the government wants SMRs alongside new large-scale stations to hit net zero,” Tom Greatrex, Chief Executive of the Nuclear Industry Association said, adding that the funding also showed investors that Britain “believes in nuclear as a green technology.”

Reuters also reported that Citi securities analysts said, “There is a longer-term business, international opportunities and potentially other uses, such as green hydrogen production, which could be used in synthetic aviation fuel, and desalination in arid regions.”

Ralph Hunter, Chief Operating Officer of Exelon Nuclear Partners and Vice President of Exelon Generation commented in a press statement, “We believe that small modular reactors could become a crucial part of the world’s clean energy mix and we are confident that, as an operational partner, we can help develop, deploy and operate a fleet of world-class SMRs.”

What Does the Build Out of 16 477 MWe Units Look Like?

Rolls Royce previously announced plans to build a fleet of 16 of these PWR type designs in the UK. The firm says it plans to submit the design to the UK Office of Nuclear Regulation by the end of the year. It takes up to four years for the ONR to complete a generic design assessment (GDA) of a new design.

That being the case, the earliest Rolls Royce could break ground for the FOAK would be early 2027. Assuming it takes three-to-four years to build the FOAK unit, that takes the firm to 2031 for the first unit to be in revenue service.

Assuming it has the financial backing, and supply chain support, it might thereafter break be able to ground for two units per year which means the entire fleet could be in revenue service by the mid 2040s.

Rolls Royce is considering the Wylfa site among others for its first unit. Depending on these factors, the speed of the build out, in terms of new starts per year, could be faster or slower.

Hypothetical Scenario of the Build Out

A hypothetical scenario is displayed below. Bottom line the hypothetical scenario indicates that completion of the 16-unit fleet of 16 470 MWe PWRs, or 7,520 MWe, would be done by 2045 at a cost of about $35 billion (constant dollars).

Rolls Royce said in 2019 that it can deliver the PWRs at a price of about $2.3 billion each once factory production begins after the first five units have been built.  See the table below that anchors on that claim.

Note that the original combined power rating for Wylfa and Oldburg, 2700 MWe each, was 5400 MWe. It follows that the Rolls Royce plan would exceed that number by 2120 MWe or roughly the equivalent of two Westinghouse AP1000s (1150 MWe each) which is what is currently being discussed in the UK for the Moorside project.

The benefits to the UK government is that by adopting the Rolls Royce plan, it could build the equivalent of three sites in its original 19.3 GWe nuclear plan and spread the capital construction costs over two decades. Also, by locating each two-unit plant at different parts of the country, it gets a more resilient grid.

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