Page type: primary-anchored (mirrors Nuclear Energy (Financing) Act 2022)
Nuclear Energy (Financing) Act 2022
Source: 2022-nuclear-energy-financing-act.md Last updated: 2026-04-05
What this instrument does
The Nuclear Energy (Financing) Act 2022 (c.15) creates the legal framework for the Regulated Asset Base (RAB) model for new nuclear power stations. The RAB model allows cost recovery from electricity consumers during construction, reducing the developer's financing risk and cost of capital compared to the CfD model (where payments begin only at generation). Designed for Sizewell C.
Three-phase regulatory structure
Phase 1: Designation (ss.2-5). The Secretary of State designates a nuclear company by notice, subject to two criteria: development must be sufficiently advanced, and designation must be likely to result in value for money (s.2(3)). Designation lasts 5 years, extendable before expiry (s.4). Must publish procedure and consult Authority, ONR, and environmental agencies (s.3).
Phase 2: Construction and revenue collection (ss.6-14, 15-30). The SoS modifies the company's electricity generation licence to enable allowed revenue recovery (s.6). When modifying, must have regard to climate duties, consumer interests, company costs, financing capability, and efficient delivery incentives (s.6(4)). Modifications take effect only when the company enters a revenue collection contract (s.6(9)). No further modifications after construction is completed (s.7(4)).
A revenue collection counterparty, designated by the SoS (s.16), collects payments from electricity suppliers under the supplier obligation (s.19). Unpaid amounts are recoverable as civil debt. The Authority (Ofgem) oversees allowed revenue, with a CMA appeal route available to the nuclear company (s.10).
Phase 3: Insolvency protection (ss.31-39). If the nuclear company fails, a court may make an RLNC administration order appointing a nuclear administrator (s.31). The objective is to secure continued electricity generation at the nuclear installation and to make the order unnecessary (s.32(1)). Rescue as going concern is preferred; transfer to a new company is permitted only if rescue is not reasonably practicable (s.32(5)). The framework is modelled on the Energy Act 2004 energy administration regime (s.33).
RAB model vs CfD model
The CfD model (Energy Act 2013) pays generators a strike price per MWh from commissioning. Consumers pay nothing during construction; the developer bears construction risk through equity and debt.
The RAB model (this Act) allows the nuclear company to recover costs from consumers during construction via the supplier obligation. This reduces the weighted average cost of capital because consumers share construction risk. The trade-off: consumers begin paying before any electricity is generated.
Defined terms
See the source file defined terms register for 13 defined terms including "nuclear company", "designated nuclear company", "relevant licensee nuclear company", "revenue collection contract", and "RLNC administration order".
Cross-references
- Generation licence: Electricity Act 1989, s.6(1)(a)
- CMA appeal: Electricity Act 1989, ss.11C-11H, Schedule 5A
- Administration framework: Energy Act 2004, ss.156-167
- Revenue Collection Regulations: SI 2023/254
- Decommissioning: Energy Act 2008, s.67
- Related policy: UK nuclear policy
Character positions
No character positions recorded for this instrument.