New deals with the UK and Czech governments to provide small modular reactors (SMR) have greatly strengthened Rolls Royce’s leadership in private nuclear capability, offering a possible solution to environmental concerns around AI’s high energy use – the company has said.
Tufan Erginbilgic, CEO of Rolls-Royce since January 2023, who has overseen a tenfold increase in the firm’s share price, believes the company could become the UK’s most valuable by using its small nuclear reactors to power energy-intensive artificial intelligence (AI). Erginbilgiç, a former longtime executive at BP, has claimed that Rolls-Royce’s strong nuclear capability is like “no [other] private company in the world,” and that if Rolls-Royce is “not market leader globally, we did something wrong.”
The CEO has made his firm’s commitment to remaining on the London Stock Exchange clear, going against the strategy of listing its shares in New York for higher valuations like British chip designer Arm has done. Despite 50 per cent of its shareholders and customers being US-based, Erginbilgic stated, “I don’t agree with the idea you can only perform in the US.” This commitment may be linked to Rolls-Royce’s strong British legacy and recent collaboration with the government.
Energy Secretary Ed Miliband announced in June 2025 Rolls-Royce SMR’s selection as the preferred bidder to build the country’s first ever small modular reactors, developing three for the UK. This followed Rolls-Royce’s agreement to partner with Czechia’s largest public company and utility firm ČEZ to deploy SMRs in the UK and Czechia in October 2024. ČEZ acquired a 20% stake in Rolls-Royce SMR, a nuclear-focused subsidiary of Rolls-Royce PLC.
In July 2025, the UK government signed an agreement with Czechia to work closely together on small modular reactors with Rolls-Royce, including supporting the delivery of up to six new reactors in Czechia by Rolls-Royce SMR, potentially worth billions of pounds. This mirrors the agreement signed by Miliband with the US at COP29 to collaborate on and accelerate the development of advanced nuclear technologies such as modular reactors.
Rolls-Royce has a long history in nuclear power. A dedicated nuclear division was established in the 1950s, driven by the need for longer-lasting and higher-performance propulsion for submarines. The firm’s pressurized water reactor (PWR) series, first deployed as PWR1 in the early 1960s, has powered the Royal Navy’s nuclear submarines since 1966. Current Dreadnought-class submarines use Rolls-Royce’s PWR3 system.
This expertise has led to Rolls-Royce’s dedicated small modular reactor (SMR) offering, harnessing the PWR’s system of water being used both as a neutron moderator and as a coolant fluid for the reactor core.
AI is a rapidly growing field and an economic powerhouse. The UK is the third-largest AI market in the world, after the US and China. Valued at $92bn (£72.3bn) in 2024, the UK’s AI sector is larger than any other country in Europe. However, there are concerns over the energy demands needed to power AI data centres due to possible environmental damage. The government established the AI Energy Council in April 2025 to assist with balancing ‘net zero’ with the UK’s focus on technology to drive economic growth.
Chaired by the Technology Secretary Peter Kyle and Energy Secretary Ed Miliband, the Council has suggested clean energy sources like nuclear as possible long-term solutions, supporting a UK energy policy that has been focused around reducing carbon dioxide emissions rather than security-of-supply or cost since the 2008 Energy Act.
2008’s Climate Change Act (CCA) set the goal to reduce greenhouse gas emissions by a minimum 80% by 2050. This was amended in 2019 to achieve a 100% reduction in emissions, known as ‘net zero,’ making the UK the first major economy to pass a net zero emissions law. Nuclear power was recognised by the government as a key method to reduce emissions in 2020, with the government’s ‘The Ten Point Plan for a Green Industrial Revolution’ announcing funding and support to deliver new and advanced nuclear power (Point 3).
This was built with the government’s commitment during 2023’s COP28 to triple nuclear energy capacity globally by 2050, signing a global pledge alongside 30 other countries. As nuclear energy offers a potential solution to AI’s energy needs, SMRs remain an unproven technology. Erginbilgic admitted that he could not point to a current working SMR example but outlined his confidence in its future potential.
While Rolls-Royce has made it clear that nuclear is a clear part of its growth strategy, its biggest business is aircraft engines. However, its current dominance is in supplying engines to wide-bodied aircraft, a market worth nine times less than narrow-bodied aircraft ($1.6 trillion). The dominant player in the narrow-bodied market is CFM International, a collaboration between American company GE Aerospace and French-based Safran Aerospace Engines.
Erginbilgic said it was “even more true” that the firm will re-enter the narrow-bodied market, claiming that Rolls-Royce is currently “talking to multiple parties, and they are also talking to us.” Rolls-Royce’s undeniable recent success with Erginbilgic at the helm has provided confidence to investors, and their multiple high-value growth areas and commitment to London make it an interesting firm to watch.
