- Rolls-Royce is joining together with Exelon and BNF Resources to produce small modular reactors in an attempt to revive the nuclear energy industry
- These reactors are smaller, cheaper, and much faster to build, which might help to overcome the resistance that the industry frequently faces
Rolls-Royce, the British engine manufacturer, Exelon, the US utility, and BNF Resources, a London-based private investment firm, have joined together to produce small modular reactors (SMRs) designed by Rolls-Royce. The new entity, Rolls-Royce SMR Limited. The £195 million of privately raised funds (taken in over a three-year period) enables the group to access a £210 million grant from the UK government. The Chicago-based electric utility, Exelon Generation, stated that it will also be contributing operational expertise to the project. This makes sense given that Exelon manages about 19,000 megawatts (MWs) of nuclear power generation in the US. Eighty percent of the equity in this new venture will be controlled by Rolls-Royce and the partners stated that this venture was open to additional investment. The plan is for a first reactor to be installed in the “early 2030’s” with an initial production run of 10 units to be completed by 2035. Contributing to interest in this technology is the government’s stated interest in replacing much of its soon to be retired nuclear fleet with SMRs. The government has also made no secret of its hopes to create an industry with export ambitions ultimately employing 40,000.
These SMRs are expected to cost about $2.4 billion and produce 470 megawatts for a cost of over $5,000 per kilowatt (KW). The next most expensive low carbon electricity production is offshore wind at a cost of $3,600 per KW according to the recently published Lazard LCOE study of renewable and non-renewable types of power generation. However, this is less than half the cost of gigantic nuclear projects under construction. For example, Southern Company’s 2,300 MW Plant Vogtle is approaching completion at a cost of about $12,000 per KW. And we would expect Hinkley Point C, currently under construction by France’s EDF in Somerset, England to experience comparably high capital costs and in-service delays.
But it is not just lower cost that is the appeal of SMRs. Southern Company’s Plant Vogtle first broke ground in 2013 and will likely be completed sometime next year, a nine-year construction period. Hinkley Point Is also facing similar delays. The Rolls-Royce-led group is promising a 500 day build on a site no bigger than “two football pitches”. As Americans, we could quibble that a soccer field is much wider than a football field but you get the point. An SMR also occupies about one-tenth of the space that a gigawatt-scale nuclear plant does.
The appeal of SMRs versus gigawatt-scale plants is clear. They’re smaller, cheaper, and much faster to build— at least on paper. And in an effort to allay supply chain concerns, Rolls-Royce noted the proposed plant’s components would be 80% UK sourced. What this announcement and the well-orchestrated press coverage that promoted it just before the Glasgow climate summit, does not address is the entrenched opposition to nuclear power whose causes range from safety fears to inadequate waste disposal to ideological hostility to central station power. We do not know Rolls-Royce plans to overcome those non-engineering challenges. But we do agree that the next growth phase in the nuclear power industry — if there is to be one — requires a detour away from gigantic plants that produce electricity at a price that is too expensive to matter.