REG - Rolls-Royce Holdings - Funding secured for small modular reactors

Rolls-Royce HoldingsAnnouncement

09/11/2021 07:00

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RNS Number : 7229R  Rolls-Royce Holdings plc  09 November 2021

 

 

ROLLS-ROYCE ANNOUNCES FUNDING SECURED FOR SMALL MODULAR REACTORS

 

Rolls-Royce (LSE:RR., ADR:RYCEY) announced today that following a successful
equity raise, the Rolls-Royce Small Modular Reactor (SMR) business has today
been established, to bring forward and deliver at scale the next generation of
low cost, low carbon nuclear power technology.

 

Rolls-Royce Group, BNF Resources UK Limited and Exelon Generation Limited will
invest £195m across a period of around three years. The funding will enable
the business to secure grant funding of £210 million from UK Research and
Innovation funding, first announced by the UK Prime Minister in 'The Ten Point
Plan for a Green Industrial Revolution'. Today's announcement is another step
towards the delivery of the Government's net zero strategy and its 10-point
plan.

 

The business, which will continue to seek further investment,  will now
proceed rapidly with a range of parallel delivery activities, including entry
to the UK Generic Design Assessment (GDA) process and identifying sites for
the factories which will manufacture the modules that enable on-site assembly
of the power plants. Discussions will also continue with the UK Government on
identifying the delivery models that will enable long-term investment in this
vital, net-zero enabling technology. Rolls-Royce SMR is engaging with export
customers across many continents who need this technology to meet their own
net zero commitments.

 

Warren East, Rolls-Royce CEO adds, "the SMR programme is one of the ways that
Rolls-Royce is meeting the need to ensure the UK continues to develop
innovative ways to tackle the global threat of climate change. With the
Rolls-Royce SMR technology, we have developed a clean energy solution which
can deliver cost competitive and scalable net zero power for multiple
applications from grid and industrial electricity production to hydrogen and
synthetic fuel manufacturing. The business could create up to 40,000 jobs,
through UK deployment and export enabled growth. As a major shareholder in
Rolls-Royce SMR, we will continue to support its path to successful
deployment."

 

Business and Energy Secretary Kwasi Kwarteng said: "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. Small Modular Reactors offer
exciting opportunities to cut costs and build more quickly, ensuring we can
bring clean electricity to people's homes and cut our already-dwindling use of
volatile fossil fuels even further. In working with Rolls-Royce, we are proud
to back the largest engineering collaboration the UK has ever seen - uniting
some of the most respected and innovating organisations on the planet. Not
only can we maximise British content, create new intellectual property and
reinvigorate supply chains, but also position our country as a global leader
in innovative nuclear technologies we can potentially export elsewhere. By
harnessing British engineering and ingenuity, we can double down on our plan
to deploy more home-grown, affordable clean energy in this country."

 

Tom Samson, CEO, Rolls-Royce SMR, said: "Today's announcement is fantastic
news. Rolls-Royce SMR has been established to deliver a low cost, deployable,
scalable and investable programme of new nuclear power plants. Our
transformative approach to delivering nuclear power, based on predictable
factory-built components, is unique and the nuclear technology is proven.
Investors see a tremendous opportunity to decarbonise the UK through stable
baseload nuclear power, in addition to fulfilling a vital export need as
countries identify nuclear as an opportunity to decarbonise. The
capitalisation of Rolls-Royce SMR takes us a step closer to achieving a
unique, and most importantly investable, proposition in nuclear energy. It is
a major vote of confidence in British nuclear technology and the potential for
building a world-leading domestic supply chain."

 

Paul Stein, Chief Technology Officer, Rolls-Royce and Chairman of Rolls-Royce
SMR commented, "In establishing this business, Rolls-Royce, BNF Capital and
Exelon are taking leadership in accelerating our path to a future without
fossil fuels. Global decarbonisation has never been more important, and we
bring decades of precision manufacturing, and nuclear experience to the
problem, adding to the skills of our partners. By deploying SMRs in the UK and
overseas we will be making a significant contribution to decarbonisation.
While the decarbonisation of the electricity grid is vital, I am particularly
excited by the use of SMRs to synthesise net zero fuels which can be used to
power Rolls-Royce engines."

 

Sean Benson, Director of BNF Capital Limited commented, "BNF has an
established history of energy market investing and we are proud to be a part
of Rolls-Royce SMR in this exciting opportunity.  Following reviews of
numerous proposals we found that this project, featuring a highly experienced
team was the most realistic, affordable and scalable solution for provision of
carbon-free baseload and alternative power requirements."

 

Ralph Hunter, Chief Operating Officer of Exelon Nuclear Partners and Vice
President of Exelon Generation commented, "As the largest producer of
emissions-free energy in the U.S., Exelon helps customers and communities meet
their environmental and economic goals. This partnership exemplifies our
commitment to investing in clean energy technologies that will create a more
sustainable future. We believe that small modular reactors could become a
crucial part of the world's clean energy mix and we are confident that, as an
operational partner, we can help develop, deploy and operate a fleet of
world-class SMRs."

 

Rolls-Royce SMR is using proven nuclear technology, coupled with a unique
factory-made module manufacturing and on-site assembly system, to harness
decades of British engineering, design and manufacturing knowhow. It brings
together the best of UK industry to ensure a decarbonisation solution that
will be available to the UK grid in the early 2030s. The potential for this to
be a leading global export for the UK is unprecedented.

 

Nine-tenths of an individual Rolls-Royce SMR power plant will be built or
assembled in factory conditions and around 80% could be delivered by a UK
supply chain - a unique offering in energy infrastructure in the UK. Much of
the venture's investment is expected to be focused in the North of the UK,
where there is significant existing nuclear expertise

 

A single Rolls-Royce SMR power station will occupy the footprint of two
football pitches and power approximately one million homes. It can support
both on-grid electricity and a range of off-grid clean energy solutions,
enabling the decarbonisation of industrial processes and the production of
clean fuels, such as sustainable aviation fuels (SAF) and green hydrogen, to
support the energy transition in the wider heat and transportation sectors.

 

-end-

 

Contact

 

Rolls-Royce SMR

Alastair Evans

Director of Corporate and Government Affairs - SMR

0044 (0) 7553 207 591

0044 (0) 7595 003 158

alastair.evans@rolls-royce.com

 

Rolls-Royce Group

Isabel Green

Head of Investor Relations

0044 (0) 7880160976

Isabel.Green@Rolls-Royce.com

 

BNF Resources

contact@bnfcapital.co.uk

 

Exelon

Beth Archer

Director, Nuclear Communications

215-219-2300

elizabeth.archer@exeloncorp.com

 

 

Notes to Editors

Rolls-Royce has been a nuclear reactor plant designer since the start of the
UK nuclear submarine programme in the 1950s.

Rolls-Royce SMR will draw upon standard nuclear energy technology that has
been used in 400 reactors around the world.

 

A Rolls-Royce SMR power station will have the capacity to generate 470mw of
low carbon energy, equivalent to more than 150 onshore wind turbines. It will
provide consistent baseload generation for at least 60 years, helping to
support the roll out of renewable generation, helping to overcome
intermittency.

 

Rolls-Royce was advised on the equity raise process by Eversheds Sutherland
and HSBC

 

When fully operational the Rolls-Royce SMR business is forecast to create
40,000 regional UK jobs by 2050 and generate £52bn in economic benefit.

 

A single power station will occupy around one tenth of the size of a
conventional nuclear generation site and power approximately one million
homes.

 

All phase one partners in the UK SMR consortium (phase 1 of the programme)
will now become long term supply-chain partners, able to contribute their
design and industry experience to strengthen the Rolls-Royce SMR business.

 

 

 

Investors:

 

Rolls-Royce SMR Ltd is a Special Purpose Vehicle established by Rolls-Royce
Group. Rolls-Royce Group will own approximately 80% of Rolls-Royce SMR on the
completion of this equity raise.

For more information see www.rolls-royce-smr.com

 

Rolls-Royce Group has led the design, development and the investment programme
to secure equity for the Rolls-Royce SMR project alongside the HMG grant.
Rolls-Royce remains the majority shareholder of the SPV and has committed £50
million of capital investment into the programme as part of the phase 2
funding process. Rolls Royce SMR is part of Rolls-Royce's pathway to net zero
by 2050 published in June 2021.

 

BNF Resources UK Limited, forms part of a family office with extensive
investments in the energy space.  The company is represented and advised by
BNF Capital Limited, an FCA regulated investment advisory business based in
the UK."

 

Exelon Generation Limited is a subsidiary of Exelon Generation, the U.S.'s
largest producer of carbon-free energy, powering more than 20 million homes
and businesses through a diverse generation fleet with more than 31,000
megawatts of capacity. Exelon Generation operates the largest U.S. fleet of
zero-carbon nuclear plants with more than 18,700 megawatts from 21 reactors at
12 facilities. Exelon Generation sets the standard for world-class power plant
operations that produce clean, safe, reliable electricity.

 

UK Research and Innovation (UKRI) is the largest public funder of research and
innovation in the UK, with a budget of over £8bn. It is composed of seven
disciplinary research councils, Innovate UK and Research England. The Low Cost
Nuclear challenge at UKRI supported Phase 1 of the project through a match
fund provision of £18 million.

 

Note on forward-looking statements

This press release may contain projections and forward-looking statements. The
words "believe", "expect", "anticipate", "intend" and "plan" and similar
expressions identify forward-looking statements. All statements other than
statements of historical facts included in this press release, including,
without limitation, those regarding the Company's financial position,
potential business strategy, potential plans and potential objectives, are
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the Company's
actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements are based on
numerous assumptions regarding the Company's present and future business
strategies and the environment in which the Company will operate in the
future. Further, certain forward-looking statements are based upon assumptions
of future events which may not prove to be accurate. The forward-looking
statements in this press release speak only as at the date of this press
release and the Company assumes no obligation to update or provide any
additional information in relation to such forward-looking statements.

 

The merits or suitability of investing in any securities previously issued or
issued in future by the Company for any investor's particular situation should
be independently determined by such investor. Any such determination should
involve, inter alia, an assessment of the legal, tax, accounting, regulatory,
financial, credit and other related aspects of the transaction in question.

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