Rolls-Royce chief says Britain’s flagship engineer will win crucial nuclear contracts ‘on merit’

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

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

His latest comments come at a time when the government is about to make its choice.

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

They are much faster and cheaper to set up than traditional factories such as Hinkley Point C in Somerset.

Each SMR will be about the size of two football fields – about a tenth the size of a normal station – and can power a million homes.

Rolls is one of six companies shortlisted for the work 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 reduced to two companies this spring. The contracts will be awarded later this year.

Rolls-Royce has for years led a project to adapt its own technology used in nuclear submarines for use in SMRs – and has already received £210 million in 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 rigorous testing required by regulators. “What I have said to the government is that I will never lobby for you to choose us because I know you will choose us on merit anyway – we are ahead of everyone else.” He added that the trial – which has previously been postponed – must remain on schedule.

“It’s important that Britain keeps up the pace and sticks to that timetable because this is a new technology and the first mover advantage is very important,” he said. ‘It’s an opportunity for Britain to not only decarbonise the economy but also create significant exports.’ These latest comments echo sentiments he has previously expressed in the media.

Rolls is already in ‘serious discussions’ with the Czech Republic, according to the CEO, who visited the country in December to talk to Prime Minister Petr Fiala.

Rolls-Royce’s SMR designs are being considered by Sweden, he added, as well as a number of other countries.

Tech giants like Amazon are also keen to use their technology to power their energy-guzzling data centers.

Winning the British contract would be an important seal of approval for other countries to place orders with Rolls.

But he has also said selection “would mean nothing” unless detailed decisions are made within months on where the reactors will be built. Oldbury in Gloucestershire and Moorside in Cumbria are expected to be the first locations to receive approval, according to a leading industry source. Officials are also monitoring the Heysham power stations in Lancashire and Hartlepool, which are owned by EDF.

A spokesperson for the Department for Energy Security and Net Zero said that ‘no decisions have been made yet on locations’, 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’ successful annual results last Thursday. Profits more than doubled last year to £1.6 billion and the company predicts further growth in 2024. Within weeks of taking up the CEO role on January 1, 2023, Erginbilgic launched a major review of the group.

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

Erginbilgic has made a paper profit of almost £22 million on his assets in the company after receiving £7.5 million as a ‘golden hello’ to join Rolls and offset the money he would have made at his previous job have earned.

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