Rolls-Royce SMR Selected To Build a Single 470 MW SMR
Rolls-Royce SMR selected as preferred bidder to build country’s first small modular reactor
Follows a two-year competition to select nuclear technology for UK deployment.
Analysis: Can Gov’ts and Utilities Build Nuclear Reactors at this Scale?
The £2.5 billion ($3.24 billion)awarded to the firm will pay for a single 470 MW PWR. Rolls-Royce has previously said the reactor would cost £1.8 billion to deliver to a customer.
Rolls-Royce has pitched to investors plans to build 16 of these reactors at various sites around the UK. The Rolls-Royce PWR is entering the final stage of the UK Office of Nuclear Regulation generic design assessment process which when complete will result in a license to build the firm’s SMRs. A caution flag for the Rolls-Royce project is that UK Energy Secretary Ed Miliband said in a BBC interview that a final investment decision for the first-of-a-kind unit is several years away.
Assuming this is the limit of government funding for SMRs, including any future SMRs from Rolls-Royce will require market based capital. All other proposals for SMRs, including some from US firms, will have also have to rely on private investors. Several US firms have non-binding MOUs to build light water design based SMRs for UK customers.
The government’s nuclear ministry had said the original plan was to award £10 billion each to two SMR developers with the plan being that the funds would cover the new build of four SMRs from each winning vendor. It’s clear that with a £14.2 billion investment in the Sizewell C project, that another £20 billion for SMRs was not in the cards given the budgetary pressures on the government for a range of priorities including increased defense spending.
Prior coverage on this blog: UK SMR Competition May Unravel Over Budget
The UK SMR competition dropped US SMR developer NuScale without citing a reason and last month Westinghouse pulled out of the competition. While it did not publicly give a reason for the decision, UK nuclear industry sources said the firm did not see from a business perspective that the proposed level of funding and terms for performance would be in its interests.
Holtec had bid a 300 MW PWR and GE Hitachi had bid a 300 MW BWR. Both firms lobbied hard for a win making promises for factory built SMRs in the UK. What’s interesting is that UK Energy Secretary Milband said in his BBC interview that private sector funded SMRs will also be built in the UK and some of them could come into revenue service before the Rolls-Royce project is complete.
Some UK nuclear industry sources said that that Rolls-Royce was always the front-runner for the award as the funding will help preserve its manufacturing capacity to build defense related small reactors for the UK navy’s nuclear powered submarines.
Westinghouse Pursuit of Privately Funded SMR Project
In February 2024 Westinghouse scored a significant win for its marketing efforts in the UK with an agreement in principle to build four 300 MW AP300 small modular reactors in a privately funded project in an industrial region of the UK. The firm has not publicly disclosed the names of its investors.
The new power station will be sited at Seal Sands, a former chemical works. The North Teesside region of Northeast England, Middlesbrough, is located on England’s North Sea coast, 260 miles due north of London. Iron and steel have dominated the industry of both Middlesbrough and the Teesside area from the 1840s. Teesside had also become one of the major steel centers in the country, and one of the largest worldwide. Industrial decline in recent years has hampered economic development in the region.
Westinghouse said in its press statement at the time, “The project is in accordance with the recently published UK Government Alternative Routes to Market for New Nuclear Projects consultation. This collaboration will further expand scale for workforce, training and supply chain localization via multiple deployment projects.”
How SMRs Fit in the UK Energy Security Strategy
According to the World Nuclear Association the UK’s energy strategy has set the target for eight new full size reactors plus fleets of various small modular reactors to produce 24 GWe capacity by 2050, meeting about 25% of the UK’s projected electricity demand. Rolls-Royce has proposed to build a fleet of 16 of it 470 MW PWRs for 7.5 GW. SMR developers, including Rolls-Royce, are looking at previously identified nuclear sites including Wylfa and Oldbury which can been tagged for 2.7 GW each.
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Sizewell C Nuclear Plant Gets £14bn in Funding from the UK Gov’t
The government has committed £14.2 billion ($19.25 billion) of investment to build the new Sizewell C nuclear plant on the Suffolk coastline. The project will be a mirror of the Hinkley Point C nuclear power station in Somerset. Both sites are the home of twin EDF 1,650 MW PWRs.
Once construction work begins, Sizewell C will take at least a decade to complete and cost at least $30 billion to complete. The government’s stake, at about half the total cost, shifts the burden to French state-owned enterprise EDF to round up institutional investors as well as taking its own stake in the project. The final investment decision in Sizewell C is expected later this year. Prior to this funding commitment the government had committed £3.6 billion ($3.86 billion) to the Sizewell C project. EDF has told the UK government that it can build Sizewell C more quickly and at a lower cost based on lessons learned building the Hinkley C project.
EDF has a 16% stake in Sizewell C and has previously said there are potential investors to cover the gap in total funding requirements. So far with the latest government infusion of cash and EDF’s stake the total raised so far is just over £18 billion ($23.8 billion). The final investment decision on the funding model for the plant is due later this summer. In 2021 the UK government booted Chinese state-owned enterprises which had pledged a 20% stake in the project in return for authority to build its Hualong One PWR at sites the UK. Then PM Boris Johnson cited “security reasons” for the decision.
World Nuclear News reported The UK government has been seeking private sector investment in the Sizewell C project, launching a pre-qualification for potential investors as the first stage of an equity raise process in September 2023.
It has also taken legislation through Parliament allowing a new way of funding new large infrastructure projects – a Regulated Asset Base (RAB) funding model, which can see consumers contributing towards the cost of new nuclear power plants during the construction phase. Under the previous Contracts for Difference system developers finance the construction of a nuclear project and only begin receiving revenue when the station starts generating electricity. M
In an interview the BBC’s Today program Energy Secretary Ed Miliband said the project would be majority publicly-owned but there would also be private investors. He said that the previous government’s policy of excluding Chinese investment in the project would continue and that all private and public investors would be subject to national security checks.
The UK government says it has a goal of building at least 24 GW of new nuclear powered generating capacity by the end of the 2030s. The two EDF projects will provide 6.4 GW or about 25% of the goal by 2030. Milband added that 70% of the supply chain would be supported by UK firms.
The government said it was also investing £2.5bn over five years into research and development for fusion energy and is making investments into its defense nuclear sector. This included an investment in Sheffield Forgemasters. The UK Atomic Energy Authority (UKAEA) has established a center for fusion R&D at the Culham site near Oxford University.
Analysis: Can Gov’ts and Utilities Build Nuclear Reactors at this Scale?
The UK government said in its funding announcement for Sizewell C that it has an objective of having 25 GW of new nuclear generating capacity in place by 2050? Is this a feasible goal? In the UK supply chains, skilled trades, and all the other factors would have to be scaled up to meet the demand generated by this kind of project. A brief exercise in benchmarking other experiences may shed some light on the answer to the question.
These claims in terms of how feasible they are can be used to assess UK claims of 25 GW being in revenue service by 2050. The UK has not identified the projects that would be built to meet this objective. Other than Wylfa, Oldbury, and Bradford, we don’t have sites selected and none of the SMR sites tipped for Rolls-Royce are a lock.
In the US regarding the Nuclear Company’s ambitious plans plans for multiple large reactors and a recent claim by Westinghouse it will also build multiple new units (10 of then), these claims need to be assessed in terms of financial and management feasibility.
Benchmarking the cost of 10 new reactors is a difficult call. However, KHNP just inked a deal with CEZ, the state owned nuclear utility of the Czech Republic, for two 1000 MW PWRs for about $18 billion. Knocking off “owner’s costs of 25%, that comes to $13.5 billion or 6,750 each. Easy math here at $6,750/kw taking into account KHNP’s experience building four 1,400 MW PWRs for the UAE.
As a hypothetical exercise, an AP1000, at 1,150 MW, would come in at $7,763 per unit. Assuming economies of scale would benefit the cost curves over the duration of building 10 of them, we’re still talking about $75-77 billion in new construction. This, by the way, is a number WEC referenced last week for their concept of a new build at this scale.
It took KHNP 12 years from breaking ground for unit 1 to commissioning unit 4 in the UAE. Building 10 reactors would easily be a two-to-three decade endeavor. In Turkey, it is taking Rosatom eight years per reactor to build out a power station with four 1,200 MW VVERs. The state-owned enterprise has going for it a mature supply chain and an experienced workforce for the project.
In the US one would hope that WEC would look at the Part 52 licenses for AP1000s that are already in place.
There are a number of COLs which are not expected to be developed in the near term by their respective utilities. These projects include four COLs held by Duke (two each at Williams States Lee, Levy County), and two COL held by Florida Power & Light (Turkey Point 6 & 7). The COLs for Duke’s two Shearon Harris reactors were suspended. Would Westinghouse or the Nuclear Company, or a partnership between them, consider buying out these COLs or joint efforts with the utilities holding them to develop new reactors at these sites?
Also, there is a long shot effort to raise capital to complete the two partially built AP1000s at V C Summer site in SC. Investors have reportedly made inquiries but no deals have been announced so far.
Separately, DTE has a COL for FERMI III and Dominion has one for North Anna. Both reference the GEH 1500 MW ESBWR.
A bottom line question is whether western industrialized countries have the political will, project management capabilities and resources including supply chain and workforce as well as and financial head room to make investments in nuclear energy at this scale. Time will tell.
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