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Rolls-Royce is a top SMR producer in Europe, well-positioned for that continent’s data center buildout.
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The company’s reactor is one-tenth the size of a conventional nuclear plant and can generate as much power as 150 windmills.
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Rolls-Royce’s fastest revenue growth is coming from its power systems business segment, which is responsible for the SMR.
The United States and China might be leading the pack in terms of artificial intelligence (AI) development, but they are far from the only countries working on the technology or expanding their data center capacity.
Europe is another hotspot for data center construction, and those data centers will face the same power problems that they do in the United States. The International Energy Agency (IEA) projects that the amount of global electricity consumed by data centers will double by 2030.
Power infrastructure is one of the most overlooked parts of the AI equation. And, like America, Europe will also need a whole lot more electricity to run its data centers. Fortunately, Rolls-Royce (OTC: RYCEY) can build a nuclear power plant in a factory.
I’m willing to bet you’ve heard the name Rolls-Royce before, in the context of super-luxury cars with an iconic hood ornament dubbed the “Spirit of Ecstasy.” But those vehicles are produced by BMW, which bought the automotive side of Rolls-Royce’s business in 1998.
Rolls-Royce predates the cars bearing its name and has been making engines for the Royal Air Force since 1914. Today, it still produces some of the best aircraft engines in the world.
However, the opportunity for Rolls-Royce in the AI infrastructure space involves its small modular reactors (SMR) business segment. These tiny power plants can be built mostly in factories. About 90% of them are pre-built and then shipped in pieces to their final location, where construction is completed.
Once completed, the SMR works like a normal nuclear reactor, just on a one-tenth scale.
One Rolls-Royce SMR can last for up to 60 years and generate up to 470 megawatts of power, which is the equivalent of 150 onshore wind turbines.
Rolls-Royce has already had some takers, too. CEZ Group, a major power company in the Czech Republic, has partnered with Rolls-Royce to deploy SMRs in the country and taken a 20% stake in Rolls-Royce shares.
German industrial giant Siemens (ETR: SIE) has also partnered with Rolls-Royce to help develop and install turbine systems for the SMR, and has pledged its help in deploying the reactors globally.
