The government is poised to approve funding for a fleet of Rolls-Royce mini nuclear reactors that the prime minister hopes will help the UK reach his target of zero-carbon electricity by 2035.

A consortium led by the British engineering firm had already secured £210m in backing from private investors for the small modular reactor (SMR) project, a sum that the government is expected to match or better. Confirmation is expected before the spending review on 27 October, according to well-placed sources.

The consortium, known as UK SMR, will rebrand as Rolls-Royce SMR to coincide with Westminster’s blessing.

Tom Greatrex, the chief executive of the Nuclear Industry Association (NIA), said: “Match-funding for Rolls-Royce would be a huge signal to private investors that the government wants SMRs alongside new large-scale stations to hit net zero. It would also show investors that the government believes in nuclear as a green technology.”

Backing from the government will pave the way for the consortium’s multibillion-pound plan to build 16 SMRs around the country, the first of which could be plugged into the grid by 2031.

Each reactor, designed to be easy to build and install, will have a capacity of 470 megawatts (MW), enough to power nearly 1.3m homes, based on average household usage.

Boris Johnson visited Rolls-Royce’s Bristol factory on Friday, an engagement understood to be unrelated to the Derby-based engineering champion’s nuclear ambitions. Neither Rolls-Royce nor No 10 would comment on whether the future of SMRs was discussed during the visit.

SMRs are understood to be a key component of the prime minister’s pledge to eliminate fossil fuels from electricity generation by 2035, a landmark promise he made last month in the run-up to the UK’s hosting of the Cop26 climate summit in Glasgow.

Rolls-Royce is being advised by HSBC, which has helped it secure £210m from private investors, a condition of the government stumping up the same amount.

Confirmed support for SMRs could signal a concerted effort within government to reverse the scheduled decline in the UK’s nuclear power capacity. About 20% of the nation’s electricity comes from 13 nuclear reactors capable of producing 7.8GW of power. But more than half of that capacity comes from reactors due to retire by 2025, and plans to replace them have stalled.

Toshiba pulled out of a plant at Moorside in Cumbria in 2020, and Hitachi withdrew planning consent for a project at Wylfa Newydd, on Anglesey, this year. While Hinkley Point C is due to start generating electricity from 2026, only one new project, Sizewell C, is now in the works, with no final investment decision yet made.

Britain’s ability to build new nuclear reactors has been further complicated by the government’s unwillingness to allow any further involvement from the state-backed China General Nuclear. CGN has a 20% stake in Sizewell C but ministers have been looking into ways to remove it from the project before it moves to the construction phase. The Chinese company was due to take a lead role in the Bradwell reactor in Suffolk, which is now highly unlikely to go ahead.

The business secretary, Kwasi Kwarteng, said last week that weaning the nation off fossil fuels would involved building at least one new nuclear project, alongside renewables such as wind and solar.

The prediction is likely to hinge on whether the Treasury, which has clashed Kwarteng’s department over household support for energy suppliers, backs a new funding model for the industry.

Industry players are keen to see the government legislate to approve the regulated asset base (RAB) model, which allows private investors a more reliable stream of revenues from nuclear power plants – which typically require tens of billions of pounds to build – by piling costs on to household energy bills.

Greatrex said RAB funding “could at last mobilise the funding for nuclear large and small to restore a backbone of clean, reliable British power to our energy system”.

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Rolls-Royce has said it could create 6,000 UK jobs within five years if the government backs its SMR plans. It has also reportedly held discussions with customers overseas, including companies such as Amazon that operate energy-hungry datacentres.

The nine-strong consortium also includes the National Nuclear Laboratory and Laing O’Rourke, the construction firm, alongside Assystem, SNC Lavalin/Atkins, Wood, BAM Nuttall, the Welding Institute and Nuclear AMRC.

Small modular reactors were first developed in the 1950s for use in nuclear-powered submarines. Since then Rolls-Royce has designed reactors for seven classes of submarine and two separate land-based prototype reactors.

Rolls-Royce did not return a request for comment.



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