The role of Nuclear Power in a net zero future

The UK Government has committed to achieving Net Zero greenhouse gas emissions by 2050. This ambitious target requires a significant increase in clean electricity generation to decarbonise sectors such as transport, heating, and heavy industry. While renewable sources like wind and solar will provide a large share of this power, nuclear energy is vital for delivering firm, reliable, and low-carbon electricity around the clock.

To support the next generation of nuclear projects, starting with the Sizewell C plant in Suffolk, the government is adopting a new financial model designed to encourage private investment, while reducing overall costs to the taxpayer and energy consumers.

What is the Regulated Asset Base (RAB) model?

The Regulated Asset Base (RAB) model is a government-backed funding approach commonly used in the delivery of large-scale infrastructure, such as water, gas, and electricity networks. It allows investors to receive a regulated return on their investment during the construction phase of a project, rather than having to wait until the asset is operational.

For nuclear power, this means that consumers will begin contributing to the cost of new plants like Sizewell C before they start generating electricity. This is a key difference from previous funding mechanisms—such as Contracts for Difference (CfD)—where costs are recovered only once a project begins delivering power to the grid. With Nuclear RAB, costs can be recovered for the construction and operation phases of the project.

How will the Nuclear RAB Levy work?

• Under the RAB scheme all electricity suppliers in the UK will be required to contribute to the funding of nuclear projects based on their market share. This will be managed through a Supplier Obligation mechanism, administered by the Low Carbon Contracts Company (LCCC), which will act as the Revenue Collection Counterparty (RCC).

• Suppliers will pass these charges onto consumers as a new non-commodity cost line item on energy bills—similar to other levies such as CfD and Capacity Market charges.



• Two charges will make up the cost recovery: Interim Levy Rates will be used to initially bill for the quarter and will be reconciled at the end; an Operational Cost Levy will be used to cover the cost of scheme administration

What does this mean for consumers?

• The government views that while consumers incur a new charge in their invoices, this will be offset by: Lowering the overall cost of capital by reducing investor risk

• Enable faster project delivery, reducing the need for full government underwriting



• Support long-term energy security and price stability, once the plant becomes operational

However, as with any levy applied to electricity bills, it will increase the non-commodity portion of energy costs, which can be a concern for energy-intensive users, public sector estates, and price-sensitive businesses.

When will the Nuclear RAB Levy come into effect?

Preparing for the future

Understanding how the Nuclear RAB model fits into the broader energy policy landscape is essential for forward-planning. As the UK government continues to develop nuclear generation as part of its clean energy mix, we can expect more costs to be recovered through this mechanism with the build out of both large and small scale nuclear reactors.



Optimised will continue to monitor the developments around the Nuclear RAB levy and provide guidance for our clients on how it may affect their energy strategy, compliance reporting, and cost forecasts.