Some investors are betting on Rolls-Royce (RR) stock rising because RR is entering the small modular reactors (SMR) market. SMRs will be manufactured in a factory and assembled at the site where they will operate. One of the selling points for SMRs is the expectation that they will be cheaper and quicker to construct than conventional nuclear power plants. Large-scale nuclear projects are notorious for running over budget and behind schedule.
SMR technology has already been proven in Russia. In 2020, a floating power station was commissioned. The result was the Akademik Lomonosov barge which now provides power for two hundred thousand homes in the Russian city of Vilyuchinsk. Nuclear reactors usually used in nuclear icebreakers were used to construct the floating power plant.
RR is designing SMRs with a four hundred and seventy megawatt capacity. Each one will be able to provide electricity to one million households.
There are currently thirty-two countries that make use of nuclear power. However, SMRs will open up new markets in countries that have not used nuclear technology because of their relative simplicity and sixty year projected life spans. Many are expected to be located on existing sites of redundant coal or gas-fired power plants. The market for SMRs is projected to be worth more than thirty billion dollars a year by 2040.
The U.K., U.S. and Canada are leading players in the development of these small nuclear reactors. The U.K. government is so interested that it has given RR two hundred and sixty million dollars. Four sites have been chosen where it is hoped that fifteen gigawatts of capacity will be installed. RR has signed memoranda of understanding with the Czech Republic, Estonia and Turkey for SMR projects.
Not everyone is enthusiastic about more nuclear power. Greenpeace does not support nuclear power due to the long-lasting problems of dealing with spent nuclear fuel waste. High profile nuclear disasters at Chernobyl and Fukushima are reminders of how badly things can go wrong when nuclear technology fails.
Last month, Germany shut down its last operational nuclear power plant. The German government has decided to invest in renewable energy instead. However, at the same time, Finland opened Europe’s biggest nuclear power plant. It is expected that about forty percent of the electricity in Finland will soon be produced by nuclear power.
The most recent survey by YouGov suggested that nuclear power is becoming more popular. In September of last year, forty-eight of the those polled said that they supported the use of nuclear power in the U.K. In August of 2019, a similar poll found that only forty percent of the respondents supported nuclear power.
From an investment point of view in the U.S., SMRs are receiving the backing of two American billionaires. TerraPower is being funded by Bill Gates. In collaboration with GE Hitachi Nuclear Energy, TerraPower has created the Natrium reactor. These are intended to provide constant power. They will compensate for when weather conditions for wind and solar farms are unfavorable. Warren Buffet, through Berkshire Hathaway, owns PacifiCorp which is partnering with TerraPower in a feasibility study for a site in Wyoming.
RR is not expected to have its first operation SMR until 2030.