The Czech Republic depends on CEZ's two nuclear plants for 30 percent of its electricity generation.
"The government confirmed and approved the partnership with Rolls-Royce SMR. Prague does not want to buy SMRs but to enable Czech companies to develop and produce them," Prime Minister Peter Fiala said.
"This is what the strategic cooperation with Rolls-Royce allows," Fiala said, adding that the first Czech SMR could be built in the first half of 2030.
CEZ, which operates nuclear power plants in the southern villages of Temelin and Dukovany, plans to install the first SMR in Temelin.
Other candidates for the partnership include US giant Westinghouse, US-Japanese group GE Hitachi and France's EDF.
CEZ earlier said it plans to install up to 10 small modular reactors by 2050.
Compared to conventional nuclear reactors, SMRs are relatively easy to build, as their systems and components can be assembled in a factory and transported as a unit to an installation site.
In addition, they are more affordable than large power reactors and carry a low risk of serious accident.
In July, CEZ announced that it had selected South Korean energy giant KHNP to build two conventional nuclear units at a cost of nearly $9 billion in Dukovany.
The new units will increase the share of nuclear power to half as coal-fired plants are phased out as part of the transition to greener energy sources.
The government expects KHNP's first new reactor to be put into trial operation in 2036 | BGNES
