The UK is changing how it funds new nuclear power stations. The new approach is called the Regulated Asset Base (RAB) model. Let’s break down what that means and how it affects everyone – simply and clearly.
What is the RAB model?
The RAB model is a new way to finance big infrastructure projects – like nuclear power stations.
It lets nuclear companies recover some of their construction costs while they build the project. Before, they could only earn money after the plant was finished. Now, they can start recovering costs during construction, through small charges on electricity bills.
Ofgem, the UK energy regulator, keeps an eye on this. It ensures charges are fair and in the public interest.
The goal? To lower financing costs by sharing risks between investors and consumers.
Why is this being introduced?
The UK has a legal target; Net Zero by 2050.
To reach it, energy supply must double, and clean energy must quadruple. Nuclear power helps provide steady, low-carbon electricity alongside wind and solar. Many old nuclear plants are closing soon. So, new ones are needed.
But new nuclear projects are expensive, often over £20 billion. The old Contracts for Difference (CfD) model left too much financial risk on developers. That caused projects like Wylfa and Moorside to be cancelled.
The RAB model changes that. It gives investors more certainty and confidence to commit money. They can recover some costs early, through consumer bills. Consumers pay a small amount each month and contribute towards a greener future. The government estimates savings of £30–£80 billion compared with the old model.
How will this appear on your bill?
You will notice a new line item on your bill related to the Nuclear RAB scheme. This will appear as a small monthly charge.
For the latest information and updates on this scheme, please visit the official LCCC and EMRS websites.
Who pays and manages the scheme?
All licensed energy suppliers in Great Britain must pay into the Nuclear RAB fund.
There are several types of payments:
Interim Levy Rate (ILR): the main charge that funds projects like Sizewell C.
Operational Costs Levy: covers admin costs (e.g. £0.0028/MWh for 2025/26).
Reserve Payments (TRA): builds a backup fund in case a supplier defaults.
Reconciliation Payments: balances actual vs. forecast collections.
Who regulates it?
Ofgem sets and regulates the framework.
LCCC (Low Carbon Contracts Company) collects the payments.
EMRS (EMR Settlement Ltd) handles settlement and invoicing.
Suppliers can pass these costs to customers for transparency. Customers with a valid Energy Intensive Industries (EII) exemption won’t be charged.
In summary
The RAB model is the UK’s new way to fund clean, reliable nuclear power. It helps reduce overall project costs, spreads risk, and supports Net Zero goals.
While consumers may see a small extra line on their bills, it is designed to save money for the long-term and keep the lights on sustainably.
