• Blog
• Energy Guides

Rolls-Royce’s Small Nuclear Reactor: UK’s £2.5 billion investment in SMR technology

As part of the Great British Energy programme, the UK Government has selected Rolls-Royce to construct three small modular nuclear reactors (SMRs) and has pledged £2.5 billion to support the development of this next-generation reactor technology.

Rolls-Royce’s 470 MW modular reactor design promises to deliver low-carbon, reliable electricity built in factories rather than on vast construction sites, cutting costs, creating jobs, and bolstering energy security.

In this guide, we explain Rolls-Royce’s SMRs and what the investment means for the UK’s energy grid. Here’s what we cover:

• What is a small modular reactor?
• How does a small modular nuclear reactor work?
• Timeline and next steps for the SMR constructions
• Rolls-Royce SMR manufacturing and supply chain
• The impact of SMRs on the grid and consumers

What is a small modular reactor?

A small modular nuclear reactor design proposed by Rolls-Royce utilises the same technology as conventional nuclear power stations, but the key differences lie in its capacity and construction method.

Capacity of Rolls-Royce’s SMR

The proposed SMR design being constructed by Rolls-Royce will have a capacity of 470 MW.

This is enough power to supply around one million UK homes, but in the context of large-scale power generation in the UK, it is still classed as small. Here’s how it compares to other active or under-construction generators on the national grid:

Modular and factory built

The key aspect of an SMR design, unlike other nuclear power plants, is that it is intended to be constructed in a purpose-built factory and then transported in modules, which are assembled on site.

The Rolls-Royce SMR design will be constructed using 1,500 standard, transportable modules, which fall into the following categories:

• Heavy pressure vessels
• Mechanical, electrical and plumbing
• Civil engineering

Once assembled on site, the individual units will occupy an area roughly equivalent to three football pitches.

The difference between an SMR and a microreactor (AMR)

An Advanced Modular Reactor (AMR) is an experimental, next-generation nuclear reactor design that produces a very small amount of power.

Whereas a single Rolls-Royce SMR can produce enough power for a small city, an AMR is designed to provide an off-grid power source for remote locations such as mines or data centres.

The UK government is funding research and development into the AMR microreactors, to demonstrate their feasibility by the early 2030s.

In contrast, the SMR design being developed by Rolls-Royce is based on mature technology that has already been deployed globally.

How does a small modular nuclear reactor work?

The SMRs being developed for the UK grid use a Pressurised Water Reactor, a well-established design that is widely used in both large-scale nuclear power stations and small-scale nuclear reactors found in military submarines.

The key difference is that the UK’s Rolls-Royce SMR will be scaled for modular, factory-built deployment.

Here’s a step-by-step overview of how a Pressurised Water Reactor generates electricity:

The reactor pressure vessel holds a sustained nuclear reaction

A reactor pressure vessel holds rods of radioactive uranium-235 to produce a sustained nuclear fission chain reaction. The reactor vessel is engineered from forged steel to withstand the enormous pressure and heat generated by this reaction.

In the Rolls-Royce SMR design, the reactor vessel is approximately 15 metres in height and 4 metres in diameter, significantly smaller than those in conventional nuclear power stations.

Control rods are used to carefully regulate the nuclear reaction so that the reactor pressure vessel emits heat at a temperature of around 300°C.

The energy produced by the nuclear reaction is used to heat water

Water is continuously circulated around the reactor core in a coolant circuit, allowing it to absorb the heat produced in the reactor vessel. The water in this circuit is kept under enormous pressure to prevent it from boiling.

The water leaving the coolant circuit reaches a temperature of around 300°C and is pumped into one of three steam generators.

Steam produced by the boiling water spins a turbine

Each steam generator contains a heat exchanger, where heat from the water leaving the reactor is transferred to a separate, lower-pressure water circuit. The lower-pressure water absorbs the heat, causing it to boil and produce steam.

The high-pressure steam then rises and passes across a turbine’s blades, causing them to rotate. The SMR is designed so that the turbine spins at 3,000 revolutions per minute.

The spinning turbine generates electricity

The spinning turbine is connected by a rotating shaft to an electrical generator.

The generator contains a large magnet that spins inside a coil of wire to produce an electric current. This final stage of the process uses exactly the same technology found in wind turbines and gas-fired power stations.

Timeline and next steps for the SMR constructions

In June 2025, the UK Government formally selected Rolls-Royce to develop three small nuclear reactors, committing £2.5 billion in funding to the small nuclear reactor programme.

Rolls-Royce is also seeking orders for its Small Modular Reactors (SMRs) from other European countries. It has already entered into a strategic partnership to deploy SMRs in the Czech Republic and has been shortlisted to deliver them in Sweden.

The timeline for constructing the British SMRs aims to have power feeding into the grid by the mid-2030s. Here’s what has been announced for the next stages of the project:

Finalisation of the Rolls-Royce contract

The selection of Rolls-Royce for the SMR project remains subject to final approval by the UK nuclear industry’s independent regulators.

As part of this process, the Department for Environment, Food and Rural Affairs has opened a public consultation on the regulatory justification for the Rolls-Royce SMR design.

Once approval is granted, the Government expects to formalise the selection by the end of 2025.

A contract with Great British Energy – Nuclear will define responsibilities, cost sharing, scheduling and delivery commitments for the project. Upon signing, a new development company called Rolls-Royce SMR Ltd will be created to undertake the work.

SMR factory sites

Rolls-Royce is currently manufacturing test prototypes of its SMRs at the University of Sheffield’s Advanced Manufacturing Research Centre.

Now that Rolls-Royce is receiving orders for the construction of SMRs, it will need to identify suitable factory locations for manufacturing the various components.

A press release from Rolls-Royce in 2022 shortlisted the locations of:

• Sunderland, County Durham
• Richmond, North Yorkshire
• Deeside, Wales
• Ferrybridge, Yorkshire
• Stallingborough, Lincolnshire
• Carlisle, Cumbria

Location for the SMRs

Great British Energy – Nuclear has been given responsibility for allocating the site, or sites, for the three SMRs that Rolls-Royce will construct by the end of 2025.

Rolls-Royce previously completed an assessment of potential sites on land owned by the Nuclear Decommissioning Authority, which identified the following locations:

• Trawsfynydd, North Wales
• Sellafield, Cumbria
• Wylfa, North Wales
• Oldbury, Bristol

All of these are existing or former UK nuclear power stations, benefiting from established electricity grid connections, a skilled local workforce and community acceptance.

Financing and investments

The £2.5 billion investment committed by the UK Government is not intended to cover the full cost of building the three SMRs, which will be considerably more expensive. Instead, it is designed to de-risk the early phases of the project, such as design finalisation and construction of the SMR factories.

Rolls-Royce will need to raise additional private or public capital for the construction of the SMRs.

Each SMR will have a lifespan of approximately 60 years, during which it will generate electricity to be sold on the wholesale electricity market. To encourage private investment, the UK Government will likely guarantee the price of electricity sold by each SMR through the Regulatory Asset Base or Contracts for Difference mechanism.

One possibility is that EDF, a business energy supplier which owns and operates most of the UK’s nuclear power stations, could act as a private investor and operator of the SMRs.

Rolls-Royce SMR manufacturing and supply chain

In this section, we’ll explain the planned SMR construction process, its supply chain, and the expected short-term and long-term impacts on the UK economy.

Factory-built repeatable modules

The Rolls-Royce plan for SMRs involves manufacturing 90% of the components for each reactor in factories that produce standard, repeatable modules.

The modular sections include:

• The reactor pressure vessel
• Steam generators and heat exchangers
• Containment structure
• Control systems

The modules produced as individual components are designed to be transportable by road, rail, or ship. Once on site, the components will undergo a 3–4-year construction period, much faster than the 10+ years typically required for traditional nuclear power stations.

UK supply chain for SMR components

Great British Energy has stated an ambition for 70% of SMR supply chain products to be British-built.

The UK Government’s press release estimates that the project could support 3,000 new skilled jobs.

Rolls-Royce has already shortlisted or partnered with more than 200 UK suppliers, including:

• Sheffield Forgemasters – nuclear-grade steel forgings
• Assystem – engineering and safety analysis
• Curtiss-Wright – design, testing and supply of reactor protection systems

Economic impact for the UK

Beyond the immediate impact of job creation, there is a key reason why the UK Government has committed £2.5 billion in capital to fund the development of SMR technology.

According to the International Energy Agency, the global SMR market is projected to reach £500 billion by 2050. The investment aims to position Rolls-Royce, a UK company, as a leader in the global race to develop SMR technology.

The impact of SMRs on the grid and consumers

This section explains the expected impact of the three planned SMRs on the grid, energy markets, and consumers.

Base-load low-carbon power supply

Each SMR will produce a reliable output of power continuously over a period of 60 years. Although not renewable (since uranium fuel is a finite resource), SMRs will provide a key source of low-carbon energy, as nuclear reactions do not directly emit greenhouse gases.

This stable output from SMRs will help to balance the increasingly intermittent renewable power generation from wind and solar farms.

Grid infrastructure and integration

The smaller-scale power generation of SMRs allows them to connect directly to regional distribution network operator grids near cities or industrial clusters. This is a major advantage, as it removes the need for new long-distance transmission lines.

This stands in sharp contrast to new large-scale offshore wind farms, which require costly extensions of the national grid under the Great Grid Upgrade project.

The development of SMRs should therefore help reduce network costs, known as TNUoS and DUoS charges, which are a significant component of business electricity prices.

Effect on the cost of electricity

As the SMRs planned for the UK grid are first-of-a-kind projects, the investment required is likely to be high compared with other methods of generating low-carbon power.

To encourage investment, the SMRs are likely to be subsidised by the UK Government and funded through environmental levies, an additional cost on domestic and business electricity bills.

In the longer term, if SMR technology proves successful, it is expected to have the following positive impacts on energy costs:

• Economies of scale – The modular and repeatable process for constructing SMRs will gradually make them cheaper over time, particularly if they are mass-produced.
• Improved energy security – Power generated from SMRs will reduce reliance on gas power stations, lowering the UK’s dependency on volatile global natural gas prices.
• Reduced balancing costs – The stability of power from SMRs will reduce the cost of balancing supply and demand on the grid, a cost recovered from consumers through BSUoS charges on electricity bills.

Back to blog Back to water guides

• Share:
• 
• 
• 
•