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Financing new nuclear plants has always been difficult for investors. Huge cost overruns for large plants such as EDF’s Hinkley Point C in Somerset have only increased the perception that nuclear power is risky and technologically complicated.
Still, there is a clear desire to More nuclear generation capacity of Western governments. Policy makers have belatedly realised that they are unlikely to achieve their goals without some involvement of the state to attract private investment. In Britain, a New state-owned nuclear agency It should help reassure potential investors that taxpayers will shoulder at least some of the risk. Even so, any nuclear renaissance will be a slow process.
Greater government intervention should benefit Rolls-Royce. The UK engineering group is the majority owner of a joint venture that is developing small modular reactor technology – plants built in factories and assembled on site to reduce costs and risks. looking at potentially selling off even more of its 70 percent stake.
In its last fundraising in 2021, the unit secured £490m, of which £210m was a grant from the UK government. But this amount is expected to run out in the first quarter of next year. The joint venture is currently in the middle of a lengthy and costly regulatory design process that will not be concluded before 2026.
Any new fundraising deal could reportedly value this company at a level similar to New York-listed SMR developer NuScale, which has a market cap of $2 billion. That would be a big step forward for a loss-making business with little revenue to speak of: in 2021, the Qatar Investment Authority launched a fundraising deal to fund the company. £85 million and acquired a 10 per cent stake in the capital.
Its success still depends on an SMR design competition organised by the UK government. The UK’s new state nuclear body, Great British Nuclear, is expected to select two SMR designs from the five submitted by the end of the year.
Each winning design would be allocated a site in Britain before GBN set up development companies, initially 100 per cent state-owned, to work with technology providers to take the projects forward. document published in 2023 It was suggested that government funding would be available, should developers need it, to ensure their technology is ready for final investment decisions to be made in 2029.
In the meantime, SMR developers must demonstrate that their technologies can offer value for money. A simpler way would be to compare construction costs with the £13bn to £14bn per gigawatt cost of Hinkley Point C at current prices. It will be harder to argue whether SMRs can generate electricity at prices comparable to other low-carbon technologies, such as onshore wind.
These are some of the unknowns. Investment in SMR technology is still based on the sometimes disputed belief that nuclear power will be indispensable for low-carbon energy systems.