Rolls-Royce suffers £78m loss on mini-nukes amid UK rollout delays

Rolls-Royce’s mini nuclear reactor business has posted a £78m loss as it awaits the outcome of a delayed UK tender competition.

The company, which is developing a small modular reactor (SMR) design that it hopes to export globally, saw losses in 2023 grow from £61m the previous year, new accounts show.

It came as the company ramped up spending on research and development from £78m to £115m. It made no revenue and employed some 590 staff.

Losses also grew as Rolls – along with three rivals – continued to wait for a decision by the UK Government on which SMR technologies it would back following a series of delays. The competition was first announced by George Osborne, the former Conservative chancellor, in 2015 but is still yet to reach a conclusion.

Tufan Erginbilgiç, chief executive of the Rolls-Royce group, has urged ministers to press ahead as quickly as possible, saying he expects orders from around the world to begin flowing in if Rolls emerges as a winner.

SMRs are seen as one of the most promising technologies for decarbonising heavy industry and providing a stable power source as the world shifts to net zero. The small reactors are factory made and assembled on site, rather than being built from scratch as large reactors are, which should deliver significant savings.

Rolls has always stressed that it expects the SMR business, which is a joint venture with other shareholders, to be loss-making until it begins to build reactors and recoup its investment. Each SMR is eventually expected to sell for between £2bn and £3bn.

The company is now approaching a series of milestones that will shape what it does next.

Last month the Czech Republic became the first country to place an order for Rolls’ SMRs – before even Britain – with the Czech state also expected to take a minority stake in the business.

At the same time, the company is a final contender in a Swedish SMR competition and has been shortlisted in the final four of Britain’s SMR process. It has advanced into the final stage of the generic design approval process with the UK nuclear regulator.

Rolls-Royce SMR is also attempting to develop a manufacturing process for the modules of its reactor, originally drawn from a design used in nuclear-powered submarines, with help from the University of Sheffield.

The British SMR design competition, which is being run by Great British Nuclear, has suffered repeated delays but is currently expected to wrap up by late this year or early next year.

If Rolls – which is seen as a frontrunner – emerges as one of two expected victors, the company will be handed a site to develop along with taxpayer funding.

Mr Erginbilgiç previously warned ministers that they risked losing “first mover advantage” on the technology and its supply chains if they did not conclude the process soon.

The Czech decision to press ahead with orders has sparked fears that jobs which could otherwise have been based in Britain now risk going abroad.

The latest accounts were published as Rolls-Royce SMR continues talks to raise more cash from investors, now expected to include the Czech government.

It previously received a £210m grant from the UK Government as well as £280m from private investors including Rolls, BNF Resources, Constellation and the Qatar Investment Authority. That money is expected to run out in the first quarter of next year.

The Telegraph revealed in August that bosses were looking to raise more funds, potentially by bringing in new investors. Mr Erginbilgiç previously said he did not expect to have difficulty securing the cash.

On Wednesday, in its newly published accounts, the SMR business said: “The company is exploring a number of funding options to continue to develop the SMR design.”

It added that bosses were “well advanced in negotiations with both existing and prospective shareholders and also potential future customers”.