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The head of Rolls-Royce has warned that the UK government runs the risk that critical supply chains to support the development of small nuclear reactors will be built elsewhere if it fails to select the companies to build them by the end of June.
Tufan Erginbilgiç, chief executive of the FTSE 100 engineer, said Britain risked repeating what happened during the offshore wind energy revolution over the past decade when the country lagged behind other European nations in manufacturing key turbine components.
Rolls-Royce was one of four companies shortlisted last year by the government to develop small nuclear modular reactors (SMRs). The competition has been subject to delays, although Great British Energy, the government’s state-owned energy company, is expected to select two winners by the “spring”.
Although further delays would be a risk for Rolls-Royce’s own plans, there was more of a risk for the UK with regards to the supply chain, said Erginbilgiç.
“Why do you think the wind supply chain didn’t happen in the UK? These supply chains, once they are developed somewhere, it is hard to change them because external economies happen there, economies of scale happen etc, etc,” he told the Financial Times in an interview.
It was important that GBN did not “delay any more” and that the “selection now comes in June,” Erginbilgiç added.
Governments are interested in the potential for SMRs — nuclear reactors that are smaller than the gigawatt-scale plants widely built around the world — to provide a reliable electricity supply to meet rising demand without generating carbon emissions.
Officials hope the scale and modular design of SMRs mean they can be built without the budget overruns and delays that have beset large-scale nuclear-power projects in recent years.
SMRs have also come into focus as tech groups such as Amazon and Google have struck power supply deals to power energy-hungry artificial intelligence data centres.
Rolls-Royce’s SMR design, which will have a 470 megawatt generating capacity, is relatively large for the type. They are generally 300MW capacity or less.
The company has already been selected as the preferred supplier in the Czech Republic. The group last year sold a minority stake in its SMR business to Czech utility ČEZ as part of a wider strategic partnership between the two companies to deploy the nascent technology. The first reactor is planned near the South Bohemian Temelín nuclear power plant, and is likely to be built in the mid-2030s.
In the event that Rolls-Royce is selected in the UK, Erginbilgiç said the company’s intent would be to do both projects in the UK and in the Czech Republic, “in parallel”.
Although there were some components that only a few global suppliers made, if the UK government pushed ahead with its SMR strategy, 70 per cent of the supply chain could be based domestically, he said.
There had been some speculation that Erginbilgiç, who has orchestrated a sweeping turnaround at Rolls-Royce since taking the helm in January 2023, would close down the SMR business after but he has remained behind it.
