Business Energy Broker
Business Energy Broker
The UK has introduced a new financing mechanism called the Regulated Asset Base (RAB) model for new nuclear power plants, which includes pass-through charges on electricity bills to fund construction during the project phase. These charges, starting in November 2025, are intended to reduce the overall financing costs and aim for long-term savings on consumer bills by making the project less risky for private investors.
RAB Model: This model allows consumers to contribute to the cost of a nuclear project while it is being built.
Payments: Electricity suppliers will collect these payments from consumers and pass them on to the project.
Timing: The charges will begin during the construction phase of a nuclear project, not just once the plant is operational.
Purpose: By providing upfront financing, the RAB model lowers the risk for private investors, reducing the cost of capital and ultimately leading to expected savings for consumers over the project’s lifetime.
Increased Bills During Construction: Consumers will see a small addition to their electricity bills, which are expected to be a few pounds or less than £1 per month on average during the full construction period.
Long-Term Savings: Despite the upfront costs, the government expects the RAB model to lead to significant savings, potentially over £30 billion on each large-scale nuclear project, compared to previous financing methods.
Supplier Responsibility: Customers with fixed electricity contracts should check with their supplier for specific updates on how this charge affects them.
Energy Security: The government views new nuclear power as a crucial source of clean, homegrown energy to ensure national energy security and meet net-zero emissions targets.
Failed Previous Models: The previous Contracts for Difference (CfD) model, where developers financed projects themselves until they were operational, led to project cancellations due to high financial risks.
Lowering Costs: The RAB model aims to make financing new nuclear projects more predictable and affordable, which is expected to attract more investment and ultimately reduce overall energy costs.