SMRs and AI: Powering Europe's energy security?

Last week, the UK Prime Minister was the latest leader in Europe to announce his commitment to nuclear energy production by announcing plans to build "a fleet" of small modular reactors (SMRs). The UK's announcement followed similar plans elsewhere in Europe over the last year.

Why are we seeing the focus shift from larger nuclear plants to small modular reactors?

In this episode, Richard speaks to Rolls Royce to understand the tech behind SMRs, the role they can play in reduce dependance on fossil fuels, and why they could prove to be an economically viable option for Europe's rollout of nuclear energy. 

Host: Richard Sverrisson - Editor-in-Chief, Montel News
Contributor: Chris Eales - France Editor, Montel News

Guest: Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR

Editor: Bled Maliqi
Producer: Sarah Knowles

Transcript

Richard Sverrisson - Editor-in-Chief, Montel News: 0:05

Hello listeners and welcome to Plugged In - the Energy News podcast from Montel, where we bring you the latest news issues and changes happening in the energy sector. The UK government wants to be one of the world leaders in nuclear. Italy has said it's ready to return to nuclear power and replace some of its renewable production. France's energy minister has expressed his priority to make nuclear power a strategic lever for a more sustainable, competitive, and resilient Europe. We've seen a flurry of announcements across Europe about what these nuclear ambitions will look like in practice. But these plans aren't all focused on large scale nuclear that we've seen in years gone by. Which leads us to the question we'll be asking in today's episode. Are small modular reactors, also known as SMRs, going to be the way that European leaders will achieve their ambitions? In this episode, I'll be speaking to Rolls Royce SMR, but first I'm joined by our France editor, Chris Eales. Welcome back to the podcast, Chris.

Chris Eales - France Editor, Montel News: 1:06

Well, thank you Richard and hello.

Richard Sverrisson - Editor-in-Chief, Montel News: 1:08

Let's start off by looking at, you know, why are we seeing an increase in plants for SMRs across Europe? It's become quite the hot topic really, rather than large scale nuclear. Why is that?

Chris Eales - France Editor, Montel News: 1:18

Well, SMRs, they promise a faster, smaller modular deployments. So the idea that manufacturers they're planning to serialize production, and the idea behind that is that with mass production, you reduce unit costs. Another aspect is the flexibility of these SMRs as compared to large scale reactors. These could replace coal units, for example, supply district heating industrials and data centers directly. The other aspect is the context. There's competition in China, Russia, and the US and Europe is way behind in terms of developing SMRs. So governments are pushing and the, with the, and the EU as well to back the kind of programs in this context with given that there are these promised benefits.

Richard Sverrisson - Editor-in-Chief, Montel News: 2:13

And but they're still in their infancy so I think in both, in terms of their concept and design. So has there been any skepticism or concerns from some in the energy sector regarding the technology?

Chris Eales - France Editor, Montel News: 2:23

There's major and very serious concern about SMRs. Some analysts actually say that SMR costs are more expensive per megawatt hour than large reactors. And if you put renewables, plus storage so more expensive at the moment without this there's no series effect. We talked earlier about the series effect that's not happening anywhere in the world at the moment. And the costs of building a prototype in Europe and in industrial processes, which means building the reactors in factories and then producing the fuel for these reactors. A recent report in France, for example the French regulator estimated would be 1 billion euros per project for this prototype. But after that, you've got the costs of building, producing each reactor and the special fuel that's required. So nobody really knows the full costs of getting a prototype off the ground. You know, and without that, there are difficulties. The projects need for to get private finance, to match public finance. This is very important in the United States, for example, where they have moved a step ahead. Private finance is matching public finance, but again, we're talking about at least a billion per project. So it's a huge, it's a huge demand, which is at the moment an investment that's regarded as too risky for private investors to enter a loan. So yes, we have seen some projects have got venture capital funding but to try to move them to the next stage. But we are a long way from that. And in fact there was a recent report from critical of the nuclear industry called the World Nuclear Industry Status Report, which said the gap between the hype and the industrial reality has never stopped growing.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:06

So I think it's safe to say, Chris, that without state support these projects probably couldn't get off the ground. But thanks very much, Chris. Well, I'm delighted to be joined by head of Customer Engagement at Rolls-Royce SMR, Sophie McFarlane-Smith. A warm welcome to the podcast, Sophie.

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 4:23

Hi Richard. Thank you very much for having me.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:26

I'd like to really start off by asking what's what are SMRs and what are, what's all the fuss about really?

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 4:33

SMRs mean cover a whole range of different technologies. So it's a catchall term that's used for light water SMRs the type of product that Rolls Royce, SMR has, which is taking existing technology, but delivering it to the market in a slightly different way as a modularized power station. But it also covers other more advanced nuclear technologies like molten salt reactors, high temperature gas reactors, reactors like ours that have a high power output. We are 470 megawatts right down to micro reacts that are a few kilowatts or a megawatt or two. So the term is used for a real wide range of applications and a different technology types. But we refer specifically to an SMR as a existing pressurized water reactor technology, but delivered as a complete power station in a modularized form. When you think about all of this sort of other industries, oil and gas construction, lots of industries have moved over the last couple of decades towards using modularization to increase sufficiency of deployment and operation. And we're just taking those technologies and applying them to the nuclear sector.

Richard Sverrisson - Editor-in-Chief, Montel News: 5:45

Absolutely. So is it, would you say, is it proven technology as it stands?

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 5:48

Definitely for a pressurized water reactor we have the most used technology in the world today. For 60, 70 years, pressurized water reactors have been used around the world. Over 70% of all of the world's nuclear plant today are pressurized water reactor technology. We in the UK and we in Rolls Royce, specifically we have been designing manufacturing and operating small pressurized water reactors on behalf of the British government and the defense program for over 60 years. So we have a lot of heritage, i in that space. But so just the rest of the world. So it is definitely proven technology. In terms of the modularization, the applications, the approach to modularization is proven by other industries and has been proven by other industries for several decades. We are just translating that. So certainly the nuclear technology is proven, but also the modularization approach is proven in other industries.

Richard Sverrisson - Editor-in-Chief, Montel News: 6:43

And has an SMR been built anywhere in the world?

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 6:46

So yes, there are reactors that are classed as SMRs that have been built or are in construction. Primarily that's in Russia, China. But there are SMR programs in place and construction underway. Notably GE Vernova project in Canada has been underway with OOPG for the last couple of years. There's a project in Romania with the new skill application that's underway and obviously we will soon begin construction in both the UK and the Czech Republic of our technology.

Richard Sverrisson - Editor-in-Chief, Montel News: 7:19

And we'll return to that very soon, Sophie, but it's certainly a very hot topic at the moment and certainly, we hear, and often it's in combination with data centers, the big tech, et cetera. But what are you hearing from, utilities and customers in regards to SMRs? Where are you seeing the biggest sort of demand centers in Europe particularly?

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 7:40

I've lost count of the ti number of applications. Every time I think we've come to the end of the number of customers or potential customers for a nuclear plant, someone else comes along and says, oh, actually you are applicable to us. The nuclear technology is just a big producer of electricity or steam. So huge amounts of industry either need electricity or steam or both. And the type of and generally industrial applications need always on 24/7 available electricity or steam. And that's what we can provide. So we are definitely talking about providing electricity to the grid, to consumers, to decarbonize the grid and provide stability as a replacement for other base load applications, but also obviously data centers. Again, they want to use as much low carbon energy as possible. And they need it always to be available. So again, there's a huge demand coming from data centers specifically for both the training of ai, but then also the usage of ai. And we, again, that is focused on certain hubs in certain countries around Europe, but then industrial applications, again, there's a huge industrial sector that spread quite widely across Europe. So we see slightly different applications in different parts of Europe. Certainly there's a huge push for replacement for coal plants in certain parts of Europe. And that's a real high application. And then in other parts of Europe it's around data centers and pharmaceutical industries, other sorts of industries, pharmac, chemical industries rather who actually are looking to decarbonize. But also the real push is around energy security. So again, having that energy independence and energy security in your country or in your region actually, especially in these current times is of high interest to government.

Richard Sverrisson - Editor-in-Chief, Montel News: 9:29

Absolutely. Could you talk us through the economics of SMRs and how, why should countries opt to, or why should some companies or, regions opt for building SMRs rather than large, large units say up to two gigawatts or, between one and two even.

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 9:45

Yeah I mean, all different nuclear technologies have different applications, so all of them are completely valid and they work in combination with each other. So obviously, certain the large scale nuclear plants in countries like the UK, in other countries, obviously in the Czech Republic, where we're working in France, there is such an energy demand that those scale of nuclear plants are absolutely required. The costs associated with those are managed as part of government infrastructure programs. That's perfectly a appropriate. What we're trying to do at the SMR scale is actually say, what we want to do is enable this technology to be financially viable for more customers than just governments. So obviously our technology is potentially suitable for governments, but actually we're talking about a price point. That means that actually private companies, private industries, can for the first time, choose to support or purchase this technology for their own energy use as well. So we're opening up the marked to much wider range of customers. Because low handful of billions of pounds in terms of an individual project. And that is something that actually from a data center company or an industrial company, that is actually a cost that they can see as economically viable going forward. The other approach we bring is obviously our type of technology is able to be deployed in many more locations, so we don't need to be in certain locations with access to certain amounts of water or various other things. Rolls Royce SMR is specifically designed to be able to be deployed in very many locations. That means that actually we can be cited perhaps near to, in existing industrial facilities in a way that's not possible for a very large scale plant just because of the size and scale that type of plant requires. So they're different for different applications.

Richard Sverrisson - Editor-in-Chief, Montel News: 11:43

So that's very interesting. So I think, 'cause you obviously you cited, government that deals with governments to build nuclear. But here you've got, you know, private companies or industries signing deals with builders such as yourself. Would that be, take the form of PPAs or long-term power contracts? How does it work in practice? What's it, I don't wanna open up the can of worms that is the contracts and everything. But what how does that work put quite simply?

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 12:07

Yeah. So the market is still evolving, I would say. I think there's a huge amount of interest in nuclear technology by many industrial companies, data centers and others. They are trying to understand how they can get access to this power. So in general, I would say the majority of companies that we're talking to, and we work with other industrial groups, the majority of companies don't actually want to own a power station. That's not part of their business. That's not what they do to today with their current existing power sources. That's not really what they want to do tomorrow. They want others to build and own and operate the plants for them, and then they can get access to the power. Now there is a discussion around how can they incentivize others to build those power stations. So you may see different models coming forward and certain models are suitable for some customers and other customers want a different approach. I think what's very clear is there is still unfortunately, a nervousness in the market in terms of how these projects will be built. But and the risks associated with the construction of nuclear plant. But as we move forward with our early projects and prove that we can do these plants, build these plants on time and on budget, then actually that concern will fall away and we will start to see more companies actually feeling more confident to come forward. But really I would say what everyone wants is access to power. They want a plug that they can plug in and they want someone else to just give them that black box of the power. But we will see different models in different places, I think.

Richard Sverrisson - Editor-in-Chief, Montel News: 13:38

As you mentioned earlier you won the bids to build three SMRs in the UK and six in the Czech Republic. Can you give me an indication of how long it typically takes to build reactors of this size and get them connected to the grid? Are we talking, 5, 10 years? Nuclear plants, nuclear technologies, not, there's lots of delays and cost overruns. Is that the case for SMRs? Potentially.

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 14:01

So it obviously depends. So our technology specifically the Rolls Royce SMR is designed specifically to reduce deployment risk. So our approach is to modularize the complete power station and then we will manufacture most of those modules in factories so we can quality assure them, we can make sure they can be managed, manufactured to time and to budget in those facilities. And then those modules will be transported to site. So we are quite, we are going to be deploying these nuclear plants in quite a different way that's been seen before and that's deliberately done to reduce risk and reduce lead time and increase certainty. And there's lots of other things I can talk about that we're doing specifically to reduce lead time. But if we talk about timescale in detail, what we are targeting is an onsite construction period of around four and a half to five years. Now we're obviously assuming that the first ones that we do are gonna take a little bit longer. But it's around four or four and a half to five years. There will be some manufacturing upfront of that. But then also there will be the planning con and consenting processes and the licensing process. Now, in many cases, including in the UK, that process currently tends to take longer than actually the manufacturing and construction of the plant. So we can only go as fast as the planning consent allows us to go. Now lots of governments, including the British government, are working on how they can accelerate that process, how they can reduce the time for planning and consenting, and we're actively involved in discussions with various governments around doing that. But obviously today we have to work within the legislation that is currently in place and we're obviously planning for that. So again, our approach is to try and accelerate this, try and get down to a construction time of four and a half to five years on site. But obviously we have to make sure that the planning and consenting can go as fast as we can go.

Richard Sverrisson - Editor-in-Chief, Montel News: 15:53

And they can be done currently. So you can build five or six at the same time. It potentially, theoretically I'm not,

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 15:59

absolutely. So the big question that we have at the moment is how many can we sensibly build at the same time? Now it's really important for us, as our, given our heritage as a manufacturer globally, we know how. We have to control what we're doing very carefully. So in the early days, we are absolutely not gonna take on more than we believe we can successfully deliver. Because it's really important that we get this right. We're talking about very high quality components, a very strictly controlled processes. So we have to make sure we're doing this correctly. So we are preparing at the moment to deliver two or three concurrent programs in different countries. And that's the build out that we have at the moment. And we are looking at how we can sensibly and safely accelerate beyond that to do more at any one time. But obviously we can only go as fast as the capacity allows within the supply chain as well. So we have to have a very measured approach with our partners to say, okay, how can we sensibly build this out across the region? And it's really important that we do that if we try and move too quickly. There is, there there's the issue that we could then make mistakes, lose control, and that's not in the interest of anyone and certainly not in the interest of our customers. So we've got to do this in a very measured way.

Richard Sverrisson - Editor-in-Chief, Montel News: 17:11

Absolutely. And I'd like to ask you about regulatory approval. Where are you currently and in the process?

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 17:16

Yeah. So we have been working, we are going through, currently going through the UK's generic design assessment process. We are very fortunate to be doing that because the UK allows us to create a generic site. In effect, we make up a site with all sorts of conditions you would never see in real life, which means that at the moment, in effect, the regulator is assessing us against conditions that we might see in many different places, certainly across Europe, but also around the world, which means that we're testing that our plant is suitable for all of those different types of conditions, which is really helpful when we want to deploy in multiple places because that's already been looked at. So we are now in step three of the generic design assessment in the UK. That's due to finish in the next year or so. Again, the final stage is a consultation rate, so it's not really within our gift in terms of when they finish, but within the next year or so we should have completed. And really importantly, we finish step two, which is where the regulator has said that they see no fundamental issue with the our design approach, which is absolutely brilliant. We obviously have the job of work now to prove that with all the evidence we're providing to them, but we are really well progressed in the UK and obviously we will move then once we move into the GBEN program, we'll move into site specific licensing straight away. The other thing that we've been doing is since the step two of the generic design assessment, we've been working very closely with other regulators across Europe and now in the US as well. So certainly the regulators across Europe have been watching us. Have been observers to our GDA process. So they've been actively involved watching the meetings we have with the British regulator, getting the information as far as is allowed via export licenses and having the opportunity asked questions early to say what they like, what they don't like, any specific feedback on the design. So we've had the opportunity to get that feedback at the design stage and make any changes if necessary. And you would not believe the issue around fire doors in different, forget nuclear regulation, which is obviously complicated, but some of the non-nuclear regulations the requirements for different size fire doors in different countries across the world is just phenomenally complicated. So we're finding all of those things now and we've got the opportunity to fix those things. But then also we have started entered the process in the US as well. So we have started engagement with the US regulator the NRC. And we're in the early stages of looking at licensing in that country as well.

Richard Sverrisson - Editor-in-Chief, Montel News: 19:51

How do the regulators compare? Are some more stringent than others? Or is that, or is you say that the issue of fire doors, I mean obviously the devil is in the detail here. It's, but but are some more stringent than others?

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 20:03

So I would say all regulators are stringent and they're all stringent in their own particular way. I think what's really helpful is all of the regulators we work with are really keen to collaborate. So they all want to quite rightly preserve their national sovereignty. They want to properly on behalf of their population. They want to be able to independently check that what is going to be deployed in their country is suitable for their country. And that's perfectly right and proper. And that's really important for public acceptability wherever we go in the world. But also what they want to do is collaborate. So where one regulator has assessed a technology, has done some independent work to assess maybe some evidence that has been provided. The other regulators don't necessarily want to redo that work unless they see that there's a need to. So what they are looking at doing is saying actually, if you've already agreed to something, let me understand how you've done that. Let me check that that is also appropriate for my regulation, which in some cases it is, in some cases it isn't. But where it is appropriate. There is a question about whether that work needs to be redone or whether they can reuse what's already been put in place. And regulators are really keen to do that. So they avoid duplication of effort. They try and make sure that they only look at new regulation where it's absolutely required. And that's really sensible. So we obviously all the regulators including and ourselves, the technology vendors and others are looking at how regulation could be harmonized in the future, which is brilliant. Like the aerospace industry where there's a couple of regulators in the world and every, everyone follows the same. Hopefully in due course we may get close to that who are around the world, but we don't expect that in the next five to 10 years. But what regulators are doing is being really pragmatic, really sensible about trying to learn from each other and accelerate the process where it's sensible. And they are absolutely great at doing that, or certainly have been with us, which is brilliant.

Richard Sverrisson - Editor-in-Chief, Montel News: 22:03

I think it's around issues of national sovereignty, isn't it as well, where people, of course, you people won't wanna decide themselves what's right for their national demand for electricity, whatever. But so what you're saying is over that if a design receives regulatory approval in one country doesn't necessarily mean it can it will be the same in another. You know that? No, absolutely not. No. You need to go through the same process from scratch again. Almost.

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 22:28

Absolutely. In principle, we have to go through the same process in from scratch, but what we are doing is already engaging with those other regulators early to make sure we can make sure they understand the technology. They can let us know any concerns. We can be very clear, what they like, what they don't like. So far, we've been very lucky. Most regulators say our technology's boring, which is brilliant. From a nuclear perspective, boring is good. So we are deliberately designed to be as low risk in regulation as possible. So really boring from a regulator perspective.

Richard Sverrisson - Editor-in-Chief, Montel News: 23:03

Yeah. Boring is good. Yeah,

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 23:04

boring is good when it comes to nuclear. So that's what we've done. But you discuss early, you make everything open. You share what's been done. And the British regulator is brilliant at that as well in terms of helping us explain our technology. In an ideal world, of course, if one regulator approved it and others just accepted, that would make our lives so much easier. But we know that's not the case at the moment. So what we are doing is working in collaboration to say, talk, let's talk to each other. Let's understand, let's move forward. And that is helping us to accelerate deployment. But, the population of any country should be reassured that their own regulator has independently assessed what they're receiving. That's only fair. That's what we would want. That's what I would want. So I think that's only fair and right.

Richard Sverrisson - Editor-in-Chief, Montel News: 23:53

So I'd just like to ask a couple of questions about the place of SMRs and nuclear, maybe even in, in the wholesale market now, we're in the middle of, rapidly changing our energy systems to a much more greener, cleaner electricity market. How do SMRs coexist with a very much renewable based system as well, where, it's very intermittent, it's very volatile, when for example, on very windy days or, there's a huge volatility in terms of energy production. How do SMRs fit in there?

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 24:24

So I think. I'm gonna call this boring again I'm afraid. We have the ability to provide that boring base load, that stable base load that underpins the whole energy system. So at the moment, obviously that's provided by coal and gas. Actually, that can be provided by nuclear. So not just in terms of the high volumes of power that are required, but the absolute stability of that power. So we have availability factors of up to 95%. So in effect, that means consumers can always see that they will have that base load power there in the grid or for their industrial application, and they can have that with certainty. So it's really important that we obviously have the wind and and the solar because absolutely to decarbonize we need every form of low carbon power that's out there. We provide a base load and also in terms of the for example, when there is additional capacity coming from wind and solar, the power that comes from us can be diverted to produce something else. So hydrogen, to produce synthetic aviation fuel to pro for all sorts of other applications, we can be switched from one application to another. Particularly applications that need steam as well as electricity. We can switch and actually, for example, produce hydrogen while the grid is being filled with solar and wind. We can be used for something else. Obviously there is the option to use, to, to in effect turn off the nuclear power plants to turn them down, to have them producing lower amounts. But to be honest, that's not necessarily the most economic approach where what we produce could be switched to other applications while and then if there's an issue with solar and wind, then we can be diverted back to the grid. So we are a really flexible base load solution that we think complements renewables incredibly well and provides that base load stability.

Richard Sverrisson - Editor-in-Chief, Montel News: 26:16

Absolutely. And as you mentioned also and provides the energy security. But so if, just a final question really, we've seen, as summers are getting hotter there's heat waves, there's droughts and we've seen how that affects some nuclear plants in certain parts of Europe, for example, with France, with having a lot of calling, calling issues. How is this an issue for SMRs, like the cooling?.

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 26:37

So it's an issue with respect to water availability. It's one of the advantages of SMRs and particularly the Rolls Royce SMRs because we are designed to require a much lower volume of water in normal operation. And we are designed to have different cooling water solutions. So depending on where we are geographically, physically, we don't actually have to be near large bodies of water. We don't need that. We can a, we actually have other module. Cooling solutions, air cooling, that mean that we need a much lower volume of water. So we certainly need a volume of water, but it's much lower than would be required by a large nuclear plant. So actually we are not so subject to issues relating to water availability. Now, we are not immune to issues relating to water availability. We, there is a still a certain envelope that we are required to be to operate within, but we are designed to be more future proof. I think one of the issues with existing nuclear plants, obviously they were designed and constructed many years ago in the sixties or in the eighties, where perhaps some of these things weren't such an issue or weren't foreseen to be an issue. And therefore now they are suffering from problems that weren't foreseen in the past, where quite rightly, our regulators and ourselves, we require ourselves to design looking at what may happen in the future, particularly with climate change. We are more immune from those issues, but I wouldn't say we're totally immune. It would be wrong of me to predict that.

Richard Sverrisson - Editor-in-Chief, Montel News: 28:07

Sophie, thank you very much indeed for being a guest on the Plugged In - Montel Energy News podcast. Thank you.

Sophie Macfarlane-Smith - Head of Customer Engagement, Rolls Royce SMR: 28:13

It's been my absolute pleasure. Thank you very much.

Richard Sverrisson - Editor-in-Chief, Montel News: 28:16

It's been an excellent and insightful discussion. I hope you agree, listeners, and thank you for tuning in to this episode. Our podcast episodes are released every Friday. For the latest news from Montel, please visit montelnews.com and you can follow us on LinkedIn, Bluesky, and other social media channels. See you next time.