Ineos, the chemicals company owned by the billionaire Sir Jim Ratcliffe, has held exploratory talks with Rolls-Royce on nuclear technology that could eventually be chosen to provide zero-carbon energy to the Grangemouth refinery in Scotland.
A deal between Ineos, one of the UK’s biggest privately owned companies, and FTSE 100 engineer Rolls-Royce could help Ineos with the tricky task of decarbonising the giant refinery, while also providing Rolls-Royce with an early customer for a new technology it hopes will transform its prospects.
Rolls-Royce’s main business is building and maintaining jet engines for commercial aeroplanes, as well as power systems for boats and land vehicles. However, it is one of a handful of companies around the world hoping to use the expertise gained from building nuclear reactors for the UK’s submarine fleet for use on land.
Ineos, which produces fuel and the chemicals used in plastics, is planning to use hydrogen to power the Grangemouth plant, which employs about 2,000 people across nearly 700 hectares (1,700 acres) of land. However, creating zero-carbon hydrogen from water requires large amounts of electricity, and it is considering options to source that power.
Ratcliffe is regularly counted among the UK’s richest people, although he moved to low-tax Monaco in 2020. He has used the £6bn fortune built up from Ineos to pursue various other interests, including a delayed attempt to build a rugged off-road vehicle, and purchases of several sports clubs. He has previously tried to buy Chelsea football club, and is seen as a possible bidder for Manchester United after its owners put it up for sale this month.
The talks between Ineos and Rolls-Royce were still at an early stage, said one person with knowledge of the situation. Another person said that discussions had centred on understanding the technology, and that no commercial negotiations have taken place. The Sunday Telegraph first reported the contacts.
The former prime minister Boris Johnson aimed to put nuclear energy at the heart of the UK’s energy strategy in April as he responded to the chaos on global energy markets prompted by Russia’s invasion of Ukraine. As well as building several large reactors capable of generating gigawatts of power, he also gave his approval to efforts to build megawatt-scale small modular reactors (SMRs).
Warren East, Rolls-Royce’s outgoing chief executive, has said that the SMR revenues could end up being many times larger than its current business, as global demand for zero-carbon energy increases during the transition away from fossil fuels. However, the company still has a host of regulatory and political and financial problems to overcome, as well as proving that it can actually build the reactors in a factory at a cost to make them viable.
However, Rolls-Royce is working to find locations for reactors. In September, it signed a memorandum of understanding with the Czech nuclear engineering firm Škoda JS to look at sites in the Czech Republic and other parts of central Europe.
Rolls-Royce this month said it was prioritising four sites of old nuclear reactors in the UK to install the new SMRs. They were Trawsfynydd and Wylfa in north Wales, a site near Sellafield in Cumbria, and Oldbury in Gloucestershire.
East will hand over the reins of the company to the ex-BP executive Tufan Erginbilgic in January, although the SMR effort is being headed internally by Tom Samson, who last week told a parliamentary committee that the company wanted to begin formal funding talks with the UK government.