The United Kingdom has backed a $US546 million ($A737 million) Rolls-Royce funding round to develop the country's first small modular nuclear reactor in a drive to reach net zero carbon dioxide emissions and promote new technology with export potential.
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Hitting this goal by 2050 will require a huge increase in low-carbon power generation such as wind, solar and nuclear but while large-scale new nuclear projects have struggled for funding, the UK is now banking on smaller versions.
"This is a once in a lifetime opportunity for the UK to deploy more low carbon energy than ever before and ensure greater energy independence," UK Business and Energy Secretary Kwasi Kwarteng said on Tuesday.
Small Modular Reactors (SMRs) can be made in factories, with parts small enough to be transported on trucks and barges and assembled more quickly and cheaply than large-scale reactors.
Each mini plant can produce power for about one million homes.
Rolls-Royce forecast that the SMR business could create up to 40,000 jobs based on British and export demand.
It said the global export potential was "unprecedented", fitting with a government plan to increase clean tech jobs as part of its so-called green industrial revolution.
The UK wants to reduce power generated from gas, a desire strengthened by this year's dramatic price rise, which has resulted in several small energy suppliers going bust.
But the SMRs won't be available until the early 2030s.
The UK will invest 210 million pounds ($A385 million) alongside 195 million pounds from Rolls-Royce and two partners, BNF Resources UK and Exelon Generation, over three years.
Rolls will own about 80 per cent of new unit Rolls-Royce SMR.
Shares in Rolls-Royce rose 4 per cent on news of the vote of confidence in the aero-engineer's SMR business.
The new funding will enable SMR technology to take the next steps through the UK's regulatory process and identify sites for plants, which will be about the size of two football fields.
"(It) sends a huge signal to private investors that the government wants SMRs alongside new large-scale stations to hit net zero," Tom Greatrex, Chief Executive of the Nuclear Industry Association said, adding that the funding also showed investors that the UK "believes in nuclear as a green technology".
Citi analysts noted that Rolls-Royce has previously estimated that the UK could need about 16 SMRs between 2030 and 2050 to replace ageing plants, and said the unit could boost the company more widely.
"There is a longer-term business, international opportunities and potentially other uses, such as green hydrogen production, which could be used in synthetic aviation fuel and desalination in arid regions," they said.
But Agency Partners analyst Nick Cunningham was less sure.
"The UK will build a few Rolls-Royce SMRs, over a period of some years, before they are obsoleted by new technology and overtaken by policy changes, and it will barely move the dial for Rolls-Royce investors," he said.
Australian Associated Press
