Sweden's Vattenfall picks Rolls-Royce SMR for nuclear power project

By Nora Buli

OSLO, June 15 (Reuters) - Swedish utility Vattenfall said on Monday it has selected Rolls-Royce SMR to supply small modular nuclear reactors, choosing the British company over U.S. rival GE Vernova, in a deal worth several billion pounds.

Sweden's parliament last year passed legislation to finance a new generation of reactors, the first built in Sweden for more than 40 years and which the government says is necessary for energy security and achieving net zero emissions by 2045.

The Rolls-Royce SMR agreement was a significant step towards building new nuclear power and would result in lower electricity prices for consumers, Swedish Energy Minister Ebba Busch told a press conference.

The British government, which had lobbied for Rolls-Royce to secure the contract, said it expected it would be a "multibillion-pound deal", although final terms will be decided at a later time.

"This deal is a major win for Britain's economy - showcasing UK engineering on the world stage and securing high value jobs, investment and export growth for years to come," Prime Minister Keir Starmer said in a statement.

Sweden has said it is prepared to spend several hundred billion crowns, or tens of billions of dollars, to revive its nuclear energy industry.

Last August, Vattenfall said its Videberg Kraft venture planned to order either five BWRX-300 reactors from GE Vernova or three Rolls-Royce small modular reactors (SMRs).

Selecting the British group makes Sweden part of a wider European initiative, Vattenfall CEO Anna Borg told a press conference.

"This project will now be turned into reality," Borg said.

At 470 megawatts (MW) output per reactor, the three units combined can produce around 12 terawatt hours (TWh) of electricity per year, Vattenfall said.

Rolls-Royce SMR said its three reactors would add capacity equal to around 6% of Sweden's annual power consumption.

A first reactor could enter operation in the mid-2030s depending on permitting and regulatory processes, the companies involved said.

Videberg Kraft, 80% owned by Vattenfall with the remaining 20% held by a group of Sweden's largest companies, plans to build the new nuclear power capacity at the site of the current Ringhals nuclear facility in southwest Sweden.

Sweden's right-of-centre government wants to revive nuclear power amid energy security concerns and forecasts that electricity demand will double by 2045. It plans to take a 60% majority stake in Videberg Kraft pending parliamentary approval.

(Reporting by Nora Buli, editing by Terje Solsvik and Susan Fenton)