Why is RAB being pursued for new nuclear

Nuclear generation has experienced a stop-start approach to investment in GB since the then Labour government put it back on the policy agenda in the early 2000s. Even with the addressing of environmental and operational concerns to the satisfaction of policymakers and regulators, its high capital costs made it require policy intervention to confirm development. After pressing go on Hinkley Point C using a Contract for Difference (CfD) mechanism that repaid the investors after production started, concerns about affordability from both consumer and investor perspectives stalled further progress.

A new mechanism for the sector, the Regulated Asset Base (RAB) model was confirmed last year as a mechanism that might offset these concerns and enable the UK government to deliver on its commitment to decide on another new nuclear power station during the current Parliament. That new station is expected to be Sizewell C and the RAB model is expected to deliver lower costs by increasing investor certainty on anticipated revenues.

In this blog, we explore the impacts of the shift to the RAB model on potential nuclear build and modelled a range of scenarios using our Benchmark Power Curve (BPC).

If you are interested in learning more about potential impacts of RAB or have an opinion about any of the above, we would love to hear from you at m.qvist@cornwall-insight.com and t.edwards@a-ferguson

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