Rolls-Royce considers move into nuclear reactors to support AI demand
Rolls-Royce has laid out its vision of a future in which its nuclear technology powers the burgeoning field of artificial intelligence (AI), a move that could catapult the company to become the UK’s most valuable business.
The venerable carmaker has struck deals to supply small modular reactors (SMRs) to the British and Czech governments to power AI data centres. While AI has gained popularity since 2022, its energy requirements have raised concerns about feasibility and environmental impact.
Tufan Erginbilgic, CEO of Rolls-Royce, said these SMR contracts are key to adding immense value. He expressed his ambition to make Rolls-Royce a global market leader, saying the company’s unique nuclear expertise puts it in a position to succeed, he told the BBC.
Although Erginbilgic has many American customers and shareholders, he emphasised the advantage Rolls-Royce has by converting its proven submarine reactors into small modular reactors for land use. According to estimates, by 2050 around 400 small modular reactors will be needed worldwide, representing a market of more than one trillion euros that Rolls-Royce hopes to dominate.
Current projects include the development of six SMRs for the Czech Republic and three for the UK. While Erginbilgic acknowledged that the technology is not yet proven, he is confident in its future potential. Concerns about the use of water for cooling data centers and SMRs have been alleviated by partnerships with tech giants such as Google, Microsoft, and Meta, who have pledged to use the energy generated by SMRs as soon as it becomes available in the US.
In addition to SMRs, Rolls-Royce sees aircraft engine manufacturing as a key growth driver. The company is trying to break into the narrow-body aircraft market, which is currently dominated by established players, and faces significant challenges. Industry veterans warn of potential price wars triggered by market leaders seeking to defend their dominant positions.
The transformation of Rolls-Royce under Erginbilgic’s leadership has been remarkable. After taking the helm in 2023, he tackled the company’s financial problems and high debt, resulting in profit forecasts of over £3 billion (€3.48 billion) and a tenfold increase in the share price.
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