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With little international fanfare, a landmark decision was made in the US at the start of the year.
A new design for a nuclear reactor won final approval from regulators. The decision unlocked a market worth $10bn (£8.1bn) per year for the reactor’s developers and presented a potential solution for gigawatts of green energy demand.
While the small group of scientists who crafted the design no doubt cheered the decision, rivals in Britain were exasperated.
Eight years ago, then chancellor George Osborne declared an ambition to “position the UK as a global leader in innovative nuclear technologies”.
But since that 2015 speech, no UK design has been greenlit, much to the frustration of the handful of British firms – including top engineer Rolls-Royce – that are desperate to build a new generation of smaller power plants.
Regulatory approval in the US made NuScale, the company behind the new reactor design, the frontrunner in the market.
Policymakers and industrialists alike hope a new generation of factory made, small-scale reactors will turbocharge the decarbonisation of industry and set up an export opportunity with well-paying jobs.
Around the world, dozens of companies are developing Small Modular Reactors (SMR) as a way to rein in the overspending associated with full-sized nuclear power plants and offer carbon-free electricity around the clock.
British developers include Rolls-Royce SMR, a division of the FTSE 100 engineering giant that is also backed by Qatar, billionaire French oil dynasty the Perrodo family, US nuclear giant Exelon Generation and £210m of taxpayer money. It has been in development since 2015.
Rolls-Royce has proposed a design about a seventh the size of a traditional power station, but at a fraction of the cost per megawatt.
It is the most advanced of UK designs, but still going through the approval process.
Yet despite the prowess behind Rolls, the nod from the US’s Nuclear Regulatory Commission has placed NuScale ahead of the competition.
Then prime minister Boris Johnson and Tom Samson, chief executive of Rolls Royce SMR
Rolls-Royce has ambitions to build a fleet of small module reactors in the UK CREDIT: Simon Dawson/No10 Downing Street
Its status as an approved design is seen as a watershed moment and puts pressure on other firms to catch up.
“They have an SMR,” said one well-placed observer, pointedly adding: “Others have a powerpoint presentation.”
Meanwhile, US SMR designer Last Energy this week said it signed a deal to sell 24 of its power plants to UK customers, further highlighting the slow progress of homegrown providers.
Experts say British advances have been held back by lingering fears about the destructive potential of nuclear disasters and a historic overreliance on other sources of energy.
A US-based developer of small nuclear reactors has signed a deal to sell 24 of its power plants to UK customers, putting pressure on rival makers including Rolls-Royce.
Last Energy said the £100m modular units, which are two-thirds the size of a football pitch, can output 20MW of electricity, enough to power 40,000 homes. They will be deployed in 2026 with no government funding required.
Several companies are developing small, factory-made nuclear power plants. It is hoped that making smaller units will lead to lower prices through “economies of scale”, by spreading the cost of development over many units.
For heavy energy users with 24-hour operations like steel mills and data centres, nuclear power is attractive because it consistently provides power, compared to wind and solar generation.
Nuclear plants can also provide heat which can be used in many chemical and industrial processes like cement making. Last Energy’s design can output 60MW of thermal energy.
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The US company still needs to win UK regulatory approval for its designs and secure suitable sites before the deals are finalised and customers pay up.
But it still expects its first plant to be delivering electricity in about three years.
Last Energy said it has sought no government funding and many of the components will be bought from existing suppliers.
Mike Reynolds, the firm’s UK boss, said: “Our private-sector led approach to delivering new nuclear power supports the wider Government efforts to promote growth and investment in the green industries of the future.”
The plants have been sold via power purchase agreements, which lock buyers into long-term energy contracts and mean that Last Energy can seek more funding for clearing the designs and eventually building them.
SMR Model
Rolls-Royce has ambitions to build a fleet of small module reactors in the UK CREDIT: Rolls-Royce
Dozens of other firms are vying to bring a large-scale nuclear plant design to market, including Rolls-Royce, GE-Hitachi and several smaller start-ups.
The UK is seen as a key market because of Britain’s long history with nuclear power and its favourable approach to foreign investment.
Last week, Jeremy Hunt unveiled a new government unit, Great British Nuclear, which aims to get nuclear projects off the ground, focusing on the development of small, modular reactors.
Last week the Government dealt a blow to the ambitions of Rolls, which wants to build a fleet of the reactors in the UK, by opening the process up to competition. The British engineer’s £1.8bn models generate 470MW of power.
While Rolls could press on with foreign or private orders, the move left executives at a loss to explain why the Government would part-fund development to the tune of £210m and then raise the prospect of not buying its models themselves.
Last Energy has shunned this process and gone directly to customers and investors to fund its smaller units.
As the RR share price climbs even those punters who bought in before COVID may soon be in profit assuming they took up the rights issue in 2020. For example, suppose someone bought 10,000 RR shares just before COVID at £7 a share and subsequently took up the 10 for 3 rights issue in October 2020 at 32p per share. After the RI they would have 43,333 shares and their total outlay would be £70,000 + £10,667 = £80,667 (excluding broker fees).
Now with the share price hitting 158p today their RR share holding would be worth £68,466. However, for them to break even the share price needs to rise to 186p. Not so far to go. However, if they had bought in at £12 in 2013 then the current share price would need to double for them to break even.
Badlands it depends how you define gambling. Let's use the following high level definition: "take risky action in the hope of a desired result." But this definition is rather vague until you define and quantify the term risk. A risk has three components: the action (buy a share), the impact of the action (will I be materially richer if I sell the share, or will I be forced to sell the share and become bankrupt, or somewhere in between these extremes), and the likelihood the impact will occur (high, medium low). Betting on a sporting event such as a horse race is usually a binary event either you win or lose. But buying a share is not a binary event unless you are unfortunate to pick a company like Marconi that goes bust. Just about everything in life involves risk. So it's all about the impact and probability associated to a risk which is clearly dependent on the circumstances of an individual. So I would argue that whether someone classes share buying as gambling is immaterial, what matters is the impact to you and the probability of the risk occurring.
Ofcom opens door to Vodafone-Three merger in overhaul of mobile phone market
Telecoms watchdog will review takeovers on their merits, rather than throwing out a deal because it would reduce competition
By
Ben Woods
9 February 2022 • 11:48am
The telecoms watchdog has opened the door to a mega-merger between Vodafone and Three UK after cooling its concerns around mobile consolidation.
Ofcom said it will review takeovers on their benefits and pitfalls, as opposed to throwing out a deal because it would reduce the number of competitors.
Mobile operators have been calling on regulators and governments to dial down their control of the industry, as they grapple with stubbornly low returns.
Nick Read, chief executive of Vodafone, recently branded the UK a "crowded marketplace" that needs consolidation to help spur industry investment in next generation 5G connectivity.
Vodafone has been strongly linked to a merger with Three UK, as part of pan-European consolidation drive to shore up its weak share price and ease pressure from the Swedish activist investor Cevian Capital.
Announcing a review of mobile markets and spectrum, Ofcom said the industry has served customers well through competition between BT's EE, Vodafone, Three UK, and O2.
However, the watchdog said it needed to take steps to clarify the future of its approach on regulation so it continued to support investment.
Outlining its position on mobile mergers, it said: "Our stance on a potential merger would be informed by the specific circumstances of that particular merger, rather than just the number of competitors."
Ministers want to blanket the majority of the country in 5G technology by 2030 as part of ambitions outlined by Michael Gove, the Levelling-Up Secretary, last week.
The Government hopes that 5G will usher in radical technologies from driverless cars to interconnected smart cities, with speeds that are more than 100 times faster than 4G downloads.
Meanwhile, the Government intends to switch off 2G and 3G signals by 2033 to ensure there is enough capacity for the 5G network.
Vodafone raises prospect of abandoning Britain with Project Galaxy overhaul
Swedish investor Cevian Capital has been pushing the company to improve its performance
By
James Titcomb
7 February 2022 • 6:00am
Vodafone has opened the door to selling off its UK business as the FTSE 100 telecoms company comes under activist pressure.
The company has reorganised its Global Enterprise unit, which sells telecoms and IT services to large corporations, under the codename “Project Galaxy”.
Analysts said the move, which brings the sprawling division under the control of local country offices, would make it easier to merge or spin off units in the UK as well as other countries.
Swedish investor Cevian Capital has been in discussions with Vodafone executives about upgrading performance and improving its languishing share price.
The changes to the Global Enterprise division, first reported by the Mail on Sunday, took place last year, before Cevian’s involvement.
But analysts said that a country- by-country reorganisation could make it easier for Vodafone chief executive Nick Read to meet demands for higher shareholder returns through consolidation.
The company has been linked with a deal to merge its UK business with mobile network Three UK.
Karen Egan, of Enders Analysis, said: “This means they can be opportunistic. The UK is actually not that significant a
part of the value these days.
“Shareholders probably aren’t that bothered about whether it’s their home market or not.”
Tesco are essentially cancelling approximately 21% of their shares. There are a number of ways they could do this but the two obvious ones are:
(a). by way of a special dividend
(b) by going in the market and buying up shares and then cancelling them.
However, going down route (b) would most likely result in the share price going north and therefore it would cost Tesco much more to buy 21% of their share base than adopting option (a). In other words option (a) is good for Tesco but not good for small PIs who decide they have to sell their TESCO shares by COB on Friday 12th February to avoid paying tax on the special dividend.