Elexon to administer funding model for UK’s nuclear power stations

Elexon has been chosen to administer a levy which will fund the government’s nuclear regulated asset base (RAB) approach, supporting the development of new plants including Sizewell C.

The Balancing and Settlement Code (BSC) administrator said the function will be carried out by its subsidiary Electricity Market Reform Settlement (EMRS).

The energy secretary directed a change to the BSC late last month, so that from 29 February, EMRS can perform the new Nuclear RAB Settlement Services Provider role.

In March 2023, The Nuclear Regulated Asset Base Model (Revenue Collection) Regulations came into force. These rules allow nuclear plant developers to receive funding from all licensed electricity suppliers to fund the design and construction phase of new projects.

EMRS will be responsible for carrying out the processes to calculate each supplier’s payments and collecting the funds they owe, according to their market share.

The subsidiary will be doing this on behalf of revenue collection counterparty, the Low Carbon Contracts Company (LCCC).

Commenting on the news Elexon chief executive Peter Stanley said: “Elexon is a trusted, independent delivery partner for the LCCC, government and Ofgem. We are pleased to be supporting the nuclear RAB scheme, which will play an important part in encouraging development of the low carbon generation GB needs to meet net zero.

“We have significant experience in delivering support schemes such as this, as since 2015 we have been successfully delivering similar functions to support suppliers’ funding of the Contracts for Difference (CfD) and Capacity Market schemes.”

The RAB model, which is designed to cut lending costs by allowing developers to collect regulated payments from suppliers while projects are being built, has been used for other major infrastructure projects such as the Thames Tideway ‘super sewer’.

In June 2022, the government gave an EDF subsidiary the green light to receive funds via the RAB model to deliver the Sizewell C plant.

Earlier this year it was revealed that the government had invested another £1.3 billion in Sizewell C, bringing the total to date to around £2.5 billion.

The Department for Energy Security and Net Zero (DESNZ) said the £1.3 billion investment “consolidates the government’s position as the majority shareholder in the project, reached in December 2023”.

It said the money will pay for ongoing preparatory works at the site in Suffolk such as improvements to nearby roads and rail lines.