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Rolls-Royce in talks with Ineos to build nuclear plant

Agreement would power Grangemouth chemicals refinery in major boost to British heavy industry

By Rachel Millard

SIR JIM RATCLIFFE’s chemicals empire is in talks with Rolls-Royce to build a mini-nuclear power station to power his Grangemouth chemicals refinery in a major boost to British industry.

The billionaire’s company Ineos is in early stage discussions with Rolls over an agreement that could help transform both of their fortunes and become a blueprint for the future of power in British heavy industry.

Industrial giants such as Ineos, one of Britain’s largest private companies, are under huge pressure from soaring energy and carbon costs.

Rolls-Royce is leading a consortium to develop a fleet of 470-megawatt “modular” nuclear reactors as it attempts to diversify from aero-engines.

Great British Nuclear, a panel of advisors convened by the Government, is understood to have told ministers it will cost £200bn to hit the national target of 24 gigawatts of nuclear power by 2050.

Boris Johnson, then prime minister, put the target in place in May as part of an energy security strategy aimed at lessening Britain’s reliance on international energy markets following Russia’s invasion of Ukraine.

Nuclear currently supplies about 18pc of Britain’s power but ageing plants are set to close before the end of the decade, leaving a looming shortage.

Rolls-Royce wants to build about 30 small-scale nuclear reactors which would be largely put together in a factory, cutting costs and the time it takes to build them. But the FTSE 100 giant needs customers ahead of time to derisk the investment, with each plant expected to cost £1.8bn.

The company needs consent from regulators on the reactors’ design, and is hoping to have the first models in operation by the end of the decade.

Tom Samson, head of Rolls’s small modular reactor (SMR) business, this week called on the Government to start talks about potential support for the plants. He warned of a looming electricity crunch, telling MPs that spending the next two or three years just talking about building more nuclear power “is going to really affect consumers in the 2030s”. He added: “It’s really important that we take action now.”

Grangemouth is a major industrial complex, refining crude oil and producing chemicals for everyday use. The site already has a link with Rolls-Royce, producing aviation fuel for its testing plant in Derby. The refinery is run in a joint venture with the Chinese state’s PetroChina.

Ineos wants Grangemouth to produce “net zero” carbon emissions by 2045, in line with the Scottish government’s national target. As part of those plans they are developing a low carbon hydrogen plant at the site to help feed its industrial processes. Depending on the process used, producing low carbon hydrogen can require vast amounts of clean electricity.

Power generators can strike a range of agreements with customers, including private wire arrangements in which power plants are directly connected by cables to their customer as well as power purchase agreements where the customer commits to paying for the plant’s output but receives the same electrons through the grid as other plants.

Any arrangement with Ineos is likely to be the latter.

The Scottish Government is currently opposed to building new nuclear power stations “using current technologies”.

‘The Rolls-Royce SMR can be deployed to power energy-intensive industrial processes’

However, it has said that it is “aware of increasing interest in the development of new nuclear technologies” such as SMRs, and considers it has a “duty to assess this and all other new technologies”.

Last month, Rolls identified sites at Trawsfynydd and Wylfa in Wales, Sellafield in Cumbria and Oldbury near Bristol as priorities for development of the plants. It says its sites will take up about one tenth of the size of a conventional nuclear generation site.

The potential boost for Rolls-Royce follows a government decision last week to commit an initial £700m towards EDF’s planned next large-scale nuclear power plant in Suffolk.

A spokesman for Rolls said: “RollsRoyce SMR is talking to a number of industrial customers who see huge potential in using our UK developed technology to provide affordable, longterm, low carbon electricity, generated from a sustainable source.

“We do not comment publicly on any commercial discussions.

“In addition to generating lowcarbon electricity for the grid, its small footprint and factorybuilt approach means the Rolls-Royce SMR can be deployed to power energyintensive industrial processes, including the production of hydrogen and synthetic fuels.”

Ineos did not comment.

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2022-11-27T08:00:00.0000000Z

2022-11-27T08:00:00.0000000Z

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Daily Telegraph