UK selects Rolls-Royce SMR to build next-generation nuclear power fleet

Rolls-Royce SMR has been named the preferred bidder to construct the United Kingdom‘s first fleet of small modular nuclear reactors (SMRs), following a two-year competitive evaluation process led by the newly renamed Great British Energy – Nuclear. The £2.5 billion allocation forms a cornerstone of the UK’s wider clean energy transformation strategy, with the first SMR contracts expected to be signed later in 2025. Subject to final government approvals, Rolls-Royce SMR will work with the publicly owned electric utility developer to deliver modular reactors capable of powering approximately 3 million homes by the mid-2030s.

The announcement, made on June 10, 2025, marks a significant milestone in the UK’s transition to a low-carbon energy system and positions Rolls-Royce SMR as one of the leading technology providers in the emerging global SMR market, which the International Energy Agency estimates could be worth nearly £500 billion by 2050.

What are small modular reactors and why is the UK investing in them?

The small modular reactor initiative is a key component of the British government’s Plan for Change and industrial strategy. Unlike traditional gigawatt-scale nuclear power plants, SMRs are designed to be smaller, factory-fabricated, and faster to deploy. Each Rolls-Royce SMR unit will be capable of delivering around 470 megawatts of electric capacity—enough to power over 1 million homes—at a fraction of the capital expenditure of traditional nuclear builds.

SMRs are expected to reduce both construction risk and costs through modularisation, allowing for deployment in more locations across the UK, including former industrial and brownfield sites. The government has pledged to fast-track planning reforms to facilitate the development of nuclear sites, which include SMRs and large-scale stations like Sizewell C.

The publicly owned entity Great British Energy – Nuclear, formerly Great British Nuclear, has now been tasked with delivery execution, and is expected to allocate a project site later this year and finalize contractual arrangements with Rolls-Royce SMR. The first units are projected to be connected to the grid in the mid-2030s, making the project one of the fastest-moving nuclear initiatives in Western Europe.

Why did the UK choose Rolls-Royce SMR for its nuclear energy programme?

The competition, launched in July 2023, evaluated several domestic and international contenders including Westinghouse, GE Hitachi, and Holtec. Rolls-Royce SMR emerged as the lead candidate following a rigorous technical and commercial assessment, bolstered by its advanced design maturity and progress through the UK’s Generic Design Assessment (GDA) process. At present, Rolls-Royce SMR is further ahead in UK regulatory approvals than any competing SMR technology.

Institutional observers, including energy transition researchers and engineering analysts, have highlighted the attractiveness of Rolls-Royce’s pressurised water reactor (PWR) design, which leverages proven operational experience while being adapted for modular deployment. The SMR programme was also seen as a strategic industrial lever to restore Britain’s domestic engineering capabilities, particularly given Rolls-Royce SMR’s plans to manufacture major components in the UK.

From a supply chain standpoint, the government has emphasised that 70% of materials and components for the SMR fleet will be sourced domestically. Chancellor Rachel Reeves stated that this localisation commitment would stimulate regional economic regeneration and ensure that “more of the clean energy value chain stays in Britain.”

How much will the UK’s SMR programme cost and who is funding it?

The SMR rollout is part of a broader £8.3 billion public investment package under the Great British Energy platform. Of that, £2.5 billion has been ringfenced specifically for SMR development through 2027. The funding supports the creation of a new joint development company between Great British Energy – Nuclear and Rolls-Royce SMR, which will manage design, siting, permitting, and project execution.

Rolls-Royce Holdings plc (LSE: RR) has already invested over £280 million in SMR development, with prior government co-funding of £210 million under earlier industrial strategy rounds. Each SMR is expected to cost between £2 billion to £3 billion, according to independent estimates from energy consultancies. The financial structure of future units could involve a regulated asset base (RAB) model, opening the door to institutional and pension fund participation.

At peak construction, the SMR programme could support over 3,000 skilled jobs across the UK, in addition to thousands of indirect roles in engineering, manufacturing, and logistics. Labour and workforce groups have signaled strong support, noting the high-skilled nature of the roles and their geographic alignment with post-industrial regions in the Midlands and North.

What do analysts and investors think about Rolls-Royce SMR’s selection?

Investor sentiment toward Rolls-Royce Holdings has turned increasingly bullish following the announcement. The company’s share price rose by nearly 1.5% on June 11, outperforming the FTSE 100 index amid rising interest in energy transition stocks. Analysts from Morgan Stanley and Barclays have suggested that the SMR win provides long-term visibility into a stable revenue stream, potentially boosting the group’s earnings quality and de-risking its civil aerospace exposure.

Strategically, Rolls-Royce SMR’s success in the UK is expected to strengthen its export credibility. The electric utility developer has already signed preliminary agreements to supply SMRs to ČEZ in the Czech Republic and is in the final evaluation round in Sweden. These international leads could accelerate once the UK project advances to site mobilisation and early construction phases.

Industry think tanks, including the UK-based Energy Futures Lab, view the SMR programme as a “test case” for sovereign industrial scaling in a post-Brexit environment. Energy Secretary Ed Miliband described the selection of Rolls-Royce SMR as a “defining moment for UK energy policy,” stating that nuclear would serve as the “cornerstone of a resilient and affordable clean energy future.”

When will Rolls-Royce SMRs be built and connected to the UK grid?

The next major milestones include signing commercial contracts by the end of 2025 and completing site selection in parallel. Government sources have indicated that several existing nuclear sites and decommissioned coal power stations are under active consideration. These include locations in Cumbria, North Wales, and Somerset, although formal announcements are pending.

Rolls-Royce SMR is progressing through Step 2 of the UK’s GDA and is expected to reach final regulatory determination by 2028. Once approved, the first site will undergo environmental impact assessments and local authority consultation ahead of any formal construction license.

The UK SMR timeline targets grid integration around 2034–2035, in alignment with the expected commissioning of Sizewell C. The combined nuclear contribution could provide up to 25% of UK baseload electricity needs by the mid-2030s, reinforcing climate goals and reducing dependence on volatile global gas markets.

Will Rolls-Royce SMRs boost UK nuclear exports and global competitiveness?

Analysts expect the UK SMR fleet to serve as a platform for global exports, especially in Eastern Europe, Southeast Asia, and Africa, where demand for stable, clean baseload energy is rising. The scalability and relatively low capital intensity of SMRs make them attractive for countries with limited grid infrastructure or smaller population centres.

The British engineering major aims to secure additional deals across the EU and Asia by leveraging the domestic deployment as proof-of-concept. According to Rolls-Royce SMR Chief Executive Chris Cholerton, “Being selected by Great British Energy – Nuclear is both a validation of our technology and an inflection point for global credibility.”

Longer term, nuclear insiders believe the UK could establish a “modular reactor corridor” by 2040, enabling clustered SMR production, supply chain growth, and skills development in parallel with floating wind and hydrogen infrastructure.

While success is contingent on regulatory consistency, financing models, and on-time delivery, the SMR selection represents a high-stakes industrial bet on energy resilience, clean growth, and export competitiveness in a carbon-constrained world.