The Nuclear Energy Financing Bill

RAB model to finance future nuclear projects

BEIS recently announced that it will introduce The Nuclear Energy Financing Bill to approve the Regulated Asset Base (RAB) model as an option to fund future nuclear projects.

The RAB model is a “tried and tested method”, typically used in the UK, to finance large scale infrastructure assets in the water and energy sectors.

Having consulted on the use of RAB financing for nuclear during 2019, the government has positioned it as a credible model for large-scale nuclear projects.

The announcement to introduce enabling legislation follows the publication of the government’s Net Zero Strategy that sets out £120mn towards the development of nuclear projects through the Future Nuclear Enabling Fund.

It also confirmed that the Budget and Spending Review will provide up to £1.7bn of new direct government funding to enable a final investment decision in a large-scale nuclear project this Parliament, with negotiations over the Sizewell C project ongoing.

Owing to its ability to provide continuous, low carbon electricity, BEIS envisages nuclear as having an important role in reducing the UK’s dependency on fossil fuels and exposure to volatile global gas prices.

Furthermore, the lower cost of financing nuclear power is expected to lead to savings for consumers of between £30bn and £80bn per project.

According to BEIS, this implies a saving of more than £10 per year for an average domestic dual fuel bill throughout the ~60 years operational life of a nuclear power station, as opposed to funding though a Contracts for Difference (CfD).

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