Rolls-Royce has made a significant move by selling a minority stake in its small nuclear reactor business to the Czech utility company, CEZ. This deal is part of a broader strategy to partner with CEZ in using this emerging technology.
Under the agreement, CEZ will acquire a 20% stake in Rolls-Royce’s venture. This follows the Czech Republic designating Rolls-Royce as its favored supplier for small modular reactors (SMRs) last month. Although the details of the deal are confidential, it is being reported that CEZ has invested several hundred million dollars for this stake.
Countries around the world are increasingly interested in the potential of SMRs—smaller nuclear reactors that can generate clean electricity to meet rising power demands without causing carbon emissions.
Tufan Erginbilgiç, the CEO of Rolls-Royce, highlighted that this partnership enhances their capability to deliver stable, secure, and low-carbon energy. Both companies aim to generate up to 3GW of electricity in the Czech Republic through these reactors, with the Czech government holding nearly 70% of CEZ.
Since taking over in January 2023, Erginbilgiç has emphasized the importance of attracting new investors for Rolls-Royce’s nuclear projects. Recent financial statements revealed that the SMR business incurred a loss of £78 million by the end of December 2023, an increase from the previous year’s £61 million, as development expenses have risen.
Current investors in this venture include BNF Resources, a company owned by the Perrodo family from France, the American energy group Constellation, and the Qatar Investment Authority. Together, these partners have invested approximately £280 million, while the UK government has contributed £210 million in grant funding to support the stringent regulatory processes for nuclear reactors.
Rolls-Royce SMR stated that the agreement with CEZ is crucial for their funding and deployment strategy, with potential future steps involving additional investments from other sources.
Utilities and governments are hopeful that SMRs can be implemented more quickly and without the budget overruns that have affected many large-scale nuclear projects in recent years. These reactors typically have a capacity of 300MW or less, capable of supplying electricity to hundreds of thousands of homes, although Rolls-Royce’s design boasts a higher capacity of 470MW.
Despite the promising aspects, there are currently only a few operational SMRs worldwide, and it’s uncertain whether they will deliver on their potential, especially considering the advancements in renewable energy and energy storage technologies.
Recent developments have sparked interest in the sector, particularly as tech giants like Amazon and Google are investing in nuclear power capabilities. Amazon is acquiring a stake in developer X-energy in the U.S., while Google has secured an agreement for SMR capacity from Kairos Power in California.
In the UK, Rolls-Royce is one of four companies selected for ongoing negotiations with the government to receive support for developing nuclear technology. Most of the UK’s aging nuclear reactors are set to close by the end of the decade, creating a critical gap in power supply just as the demand for energy rises with the increase in electric vehicles.
Currently, only Hinkley Point C is under construction, and a final decision on another planned plant, Sizewell C, has yet to be made.