Rolls-Royce, the engine maker, is to use its expertise in powering Britain's fleet of nuclear submarines to help to build the next generation of nuclear power stations.

With sales of jet aircraft declining sharply as a result of high fuel prices, Britain's most famous engineering company is creating a new business unit designed to tap into what it termed a “global renaissance” in nuclear power.

Jonathan Hale, director of corporate development, said that Rolls-Royce could be a leading supplier of components for new nuclear stations, both in Britain and abroad, and could provide engineering expertise and advice to governments and reactor builders and operators.

Mr Hale said that the new business unit eventually could be bigger than Rolls-Royce's marine business, which makes propellers and turbines for ships and submarines. It had sales of £1.5 billion last year and employs more than 7,000 people.

Rolls estimates that the worldwide market for civil nuclear energy could increase to £50 billion within 15 years, from £30 billion today.

Based in Derby, the new division will build on Rolls-Royce's existing expertise building and servicing nuclear reactors for Royal Navy submarines. Rolls has nearly 2,000 people in its nuclear division, including 1,000 engineers, based mainly in Derby and at Dounreay, northern Scotland, but also in the United States and France.

Sir John Rose, the company's chief executive, said: “Rolls-Royce has been involved in the UK's nuclear industry for over 50 years. Our experience is directly applicable to all phases of new-build programmes that are planned in the UK and globally, and also to the upgrade of existing plants.”

As well as helping to design and build 27 reactors for the Royal Navy's nuclear submarine programme, Rolls has contracts to supply technical expertise to EDF, the French utility, which wants to build four reactors in Britain, and Toshiba Westinghouse, a nuclear reactor specialist.

George Lowe, the Rolls-Royce executive who is to head the new division, said that the company could manufacture virtually any of the components required for a new civil reactor, except for some of the very largest, specialist steel forgings, such as reactor vessels. He said that Rolls had Britain's most well-established nuclear supply chain, including a network of about 260 British companies.

Mr Hale said: “We have more nuclear capability than any other company in the UK by far. If we develop a civil nuclear business here, then we can export it around the world.” He said that the company planned to bolster the new unit by hiring and training nuclear engineers.

Rolls-Royce's decision to focus on civil nuclear energy comes after a similar move by BAE Systems, the British defence group, and reflects a growing push by the Government to build up the UK's potential as an exporter of civil nuclear technology.

Nick Cunningham, an aerospace analyst for Evolution Securities, said that the push made sense. “Rolls has a significant pool of expertise that is lacking elsewhere in the UK, so you can see the attraction,” he said.

However, Mr Cunningham said that the company should not allow itself to be distracted from its core business of making jet and marine turbines.

Mr Cunningham said that building nuclear reactors was an expensive business that “could stretch their balance sheet. They don't want to become prime contractors, but occupying a quasi-consulting role would make a lot of sense.”

Reaction chain

— Rolls-Royce has been building and servicing the Royal Navy’s submarine reactors since the 1950s

— It employs 1,800 people in the UK, based mainly in Derby and at Dounreay, Scotland, where it operates Vulcan Shore, the Royal Navy’s land-based test reactor

— It has a long-term contract with EDF to support all of France’s 58 nuclear reactors and also supplies specialist safety instruments

— The company helped to build Sizewell B, Britain’s newest nuclear power station

— It sources 90 per cent of its components from about 260 UK suppliers, representing Britain’s biggest nuclear supply chain

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