Rolls-Royce chief says Britain’s flagship engineer will bag vital nuclear contracts ‘on its merits’

Rolls-Royce is in the lead to win the race to build Britain’s first fleet of mini nuclear power plants, boss Tufan Erginbilgic told The Mail on Sunday.

Erginbilgic, who has led a stunning turnaround of the FTSE 100 engineering firm, says Rolls’ designs are far more advanced than those of other companies vying for a government deal to make small modular reactors (SMR).

His latest comments come as the Government is about to make its selection.

These power stations have become a key part of the UK’s net zero plans.

They are much quicker and cheaper to install than traditional plants such as Hinkley Point C in Somerset.

Each SMR will be about the size of two football fields (about one-tenth the size of a normal station) and will be able to power one million homes.

Rolls is one of six companies shortlisted for the job by Great British Nuclear (GBN), a government body set up last year that oversees the sector.

The list, which also includes France’s EDF, GE-Hitachi and Westinghouse, will be narrowed to two companies this spring. Contracts will be awarded later this year.

Rolls-Royce has been spearheading a project for years to adapt its own technology used in nuclear submarines for use in SMR, and has already received £210m of government funding.

Erginbilgic told The Mail on Sunday that the company’s designs are about “two years” ahead of the other shortlisted companies and are already undergoing the rigorous testing required by regulators. “What I have said to the Government is that I will never push for you to choose us because I know that on merit you will choose us anyway – we are ahead of everyone else.” He added that the process, which had previously been delayed, should remain on schedule.

“It’s important that the UK moves at pace and sticks to that timetable because this is a new technology and the first-mover advantage is very important,” he said. “It is an opportunity for the UK to not only decarbonise the economy but also create important exports.” These latest comments echo sentiments she had previously expressed in the media.

Rolls is already in “serious talks” with the Czech Republic, according to the head of the Executive, who visited the country in December to talk with Prime Minister Petr Fiala.

Rolls-Royce’s SMR designs are being considered in Sweden, he added, as well as in other countries.

Tech giants like Amazon are also interested in using their technology to power their energy-intensive data centers.

Winning the contract in the UK would be an important seal of approval for other countries to order from Rolls.

But he has also said that being selected “would mean nothing” unless detailed decisions are made in a few months about where the reactors will be built. Oldbury in Gloucestershire and Moorside in Cumbria are expected to be the first sites to receive approval, according to a senior industry source. Officials are also considering the Heysham power stations in Lancashire and Hartlepool, owned by EDF.

A spokesperson for the Department of Energy Security and Net Zero said “decisions have not yet been made on sites” but that it is working with GBN “to support access to potential sites for new nuclear projects”.

Erginbilgic’s comments follow the publication of Rolls’ blockbuster annual results last Thursday. Profits more than doubled to £1.6bn last year and the company forecasts further growth in 2024. Within weeks of taking over as CEO on January 1, 2023, Erginbilgic launched a comprehensive review of the cluster.

The Rolls share price hit a five-year high after last week’s results announcement, adding to a rally that made the company the best-performing Footsie stock last year.

Erginbilgic has made a paper profit of almost £22m on its stakes in the company after receiving £7.5m as a ‘golden hello’ to join Rolls and offset money he would have earned at work former.

But shareholders are still missing out on the chance for a dividend due to the engineering giant’s poor – but improving – credit rating. Erginbilgic said he was “optimistic” that major agencies S&P, Moody’s and Fitch could upgrade their ratings on Rolls following the results, paving the way for payments to resume.