• British aerospace group Rolls-Royce received backing from the U.K. government to build the country's first small modular nuclear reactors.
• The announcement follows a two-year selection process and reaffirms Britain's embrace of nuclear power.
• Rolls Royce welcomed the decision, saying it represents a "very significant milestone" for the business and Rolls-Royce SMR.

British aerospace group Rolls-Royce on Tuesday received backing from the U.K. government to build the country's first small modular nuclear reactors.

The announcement follows a two-year selection process and reaffirms Britain's embrace of nuclear power, particularly as it also pledged on Tuesday to invest £14.2 billion ($19.2 billion) to build the large Sizewell C power station in eastern England.

U.K. Energy Secretary Ed Miliband said plans to build the country's first-ever small modular reactors (SMRs) would create thousands of jobs, support regional economies and strengthen energy security.

"We are ending the no-nuclear status quo as part of our Plan for Change and are entering a golden age of nuclear with the biggest building programme in a generation," Miliband said.

Britain's center-left Labour government said the plans could support up to 3,000 jobs and power the equivalent of 3 million homes once the SMRs are connected to the grid in the mid-2030s.

Rolls Royce welcomed the decision from Britain's state-owned energy company, Great British Energy - Nuclear, to build three SMR units. The FTSE 100 group said it represents a "very significant milestone" for the business and Rolls-Royce SMR.

"It is a vote of confidence in our unique nuclear capabilities, which will be recognised by governments around the world," Rolls-Royce CEO Tufan Erginbilgic said in a statement.

"It is also evidence that the strategic choices we have made in the transformation of Rolls-Royce are delivering," he added.

Shares of Rolls Royce rose more than 2% on the news, notching a fresh 52-week high.

The U.K. government said it intends to sign a contract with Rolls-Royce SMR and allocate a site later this year, subject to regulatory approval.

Divisive energy source

SMRs promise to have smaller and lighter footprints than traditional plants, potentially making them cheaper and quicker to build when they are fully commercialized.

Amazon and Google both signed deals last year to develop SMRs in the U.S. as tech giants increasingly turn to nuclear to fulfill the growing energy demands from data centers.

As it is low-carbon, advocates argue that nuclear power has the potential to play a significant role in helping countries generate electricity while slashing emissions and reducing their reliance on fossil fuels.

Some environmental groups, however, warn the nuclear industry is an expensive and harmful distraction to cheaper and cleaner alternatives.