Rolls-Royce eyes cut of £50bn nuclear market

Rolls-Royce is creating a nuclear unit to ensure that it gets a slice of the global civil nuclear market that the engineer believes will be worth £50bn in 15 years' time.

In the face of growing pressure to replace existing dirty power sources with environmentally friendly alternatives, nuclear is firmly back on the agenda. Rolls is already talking to utilities and reactor vendors around the world, particularly those involved in the design of next-generation reactors, and the newly created 450-strong division could ultimately outstrip the group's £1.5bn marine business and employ several thousands of people.

Once reticent about its involvement with the Royal Navy's long-running nuclear programme, Rolls is now keen to champion its experience.

"We have kept a low profile about our nuclear business in the last few decades but we think there is now going to be a nuclear renaissance," Jonathan Hale, the company's business development director, said. "We have more capacity and more skills than any other company in the UK by far, and with the growth of the civil market it is time to focus on that more."

The group does have long experience to draw on. It has been involved in nuclear engineering since the first transfer of pressurised water reactor (PWR) technology from the US to the UK in the 1950s. It employs 2,000 nuclear specialists, of which around half are engineers, and it manufactures all reactor components apart from the enormous containment vessel and stream generator. It also has expertise at the design, safety testing, licensing, and maintenance phases.

Rolls is, unsurprisingly, a vocal supporter of the Government's plans for eight new nuclear power stations, the earliest of which could come on stream in 2018. But the company is also trumpeting its UK-centricity – including an accredited supply chain comprised of more than 260 companies that between them employ some 20,000 people.

"It is important for the UK industry to be involved: these assets last up to 60 years, safety needs to be kept under local control, and there is the potential to create thousands of high-value jobs," Mr Hale said.

Currently the UK is at the forefront of the nuclear comeback, largely because only three of its 10 existing reactors – which between them generate nearly a fifth of the country's electricity – will still be going in 2020.

"If this country stays at the front, globally, then the industry will build up a capability that can then be exported," Mr Hale said. "So we are keen the nuclear programme goes ahead quickly here."

But the heady mix of political issues, planning procedures and construction complexity makes progress glacial.

George Lowe, the president of Rolls' new division, says the domestic market is a priority, but is not the only one. "Our preference is for business in the UK, but if there is slippage in that programme or even, God forbid, it doesn't happen, there are other opportunities for us to use our capability and expertise on the global stage," he said.

Rolls is already contracted to both EDF, the French utility, and Westinghouse, the US nuclear giant, as part of the licensing phase of the design of the next generation of reactors.

"There is a level of participation with certain reactor vendors and utilities that is naturally in advance of others," Mr Lowe said.