Rolls-Royce gains a boost in confidence, asserts Maggie Pagano, due to Tufan Erginbilgic's optimistic outlook.
The demand for electricity from data centers worldwide, particularly those dedicated to Artificial Intelligence (AI), is set to soar in the coming years. According to the International Energy Agency, electricity demand from data centers could more than double by 2030, and demand from AI data centers could quadruple during the same period [1]. To meet this growing demand, reliable, carbon-reducing, and scalable power solutions are essential. Enter Small Modular Reactors (SMRs), a technology that is gaining traction in the power industry.
Rolls-Royce, a British multinational engineering company, is one of the key players in the SMR market. Under the leadership of CEO Tufan Erginbilgic, Rolls-Royce has demonstrated impressive growth, with shares rising tenfold since he took over [2]. Erginbilgic has expressed confidence that Rolls-Royce will become Britain's most valuable company, and he believes that the company has the potential to lead the SMR market [3].
Rolls-Royce has cutting-edge SMR technology that has emerged from its work on nuclear submarines. The company has already signed deals to build three SMRs for the UK government and six for the Czech Republic [4]. The potential market for SMRs is estimated to be at least $1 trillion (£740 billion) [5], making it a lucrative opportunity for Rolls-Royce.
The advantages of SMRs make them well-suited to decentralized and high-demand power uses like AI data centers. SMRs are modular, factory-built, and shipped as modules, allowing for incremental capacity additions — ideal for data centers that need flexible scaling rather than a single massive power plant [6]. Additionally, experts predict that once standardization and production volume improve, SMRs could offer cost-competitive electricity, making them financially viable for power-intensive users like data centers [7].
The market potential for SMRs in powering AI data centers is strong and growing. The surge in compute-heavy AI workloads is significantly increasing the power requirements of data centers globally [8]. SMRs offer a solution by providing stable baseload power with a lower footprint compared to large nuclear plants. Moreover, more than 40 countries are exploring SMR technologies, and the general drive for decarbonization and energy security further supports SMR adoption as part of AI infrastructure power strategy [9][10].
However, there are challenges to be addressed. One concern is whether the UK workforce has the necessary skills to build SMRs, if Rolls-Royce decides to build in the UK [11]. Another uncertainty lies in the shape the AI data center market will take over the next few years and the impact of tech giants like Microsoft and Amazon on the market [12].
Despite these challenges, the momentum and investment indicate a robust market potential and favorable forecasts for SMR-powered AI data centers over the next decade. By 2025 and beyond, SMRs are expected to play an increasingly important role in powering AI data centers due to their scalability, safety, and potential for low-carbon, reliable electricity supply in a market growing at a rapid pace [13][14][15].
References:
- International Energy Agency
- Financial Times
- The Telegraph
- Rolls-Royce
- World Nuclear Association
- Forbes
- Nuclear Energy Insider
- Forbes
- World Nuclear Association
- Nuclear Energy Insider
- The Guardian
- TechCrunch
- Forbes
- Nuclear Energy Insider
- World Nuclear Association
- Given the growing demand for power in AI data centers and the potential for SMRs to offer cost-competitive, low-carbon electricity, smart businesses may consider investing in Rolls-Royce, a company known for its advanced SMR technology and significant growth in the power market.
- As the demand for stocks in companies that invest in and develop technology for the business sector, particularly those focused on power, is predicted to rise, finance experts may want to look into investing in stocks related to SMRs, such as Rolls-Royce, which presents a lucrative market opportunity of at least $1 trillion (£740 billion).
- With the technology industry experiencing rapid growth and AI data centers requiring powerful and reliable energy sources, companies focused on finance, business, and technology could find it advantageous to invest in companies that specialize in clean and scalable power solutions like SMRs, such as Rolls-Royce, to ensure sustainable and efficient electricity supply for their own operations or clientele.
