New nuclear subsidy effective from November 2025
The Low Carbon Contracts Company (LCCC) has confirmed the nuclear Regulated Asset Base (RAB) levy will come into effect from 1 November. The levy will be recovered by suppliers from all consumers except Energy Intensive Industries (EIIs) who will be exempt.
On 12 August, the LCCC set the first levy rate at £3.455/MWh to apply until 31 December 2025. In addition, in October, the LCCC will charge its administrative costs at a rate of £0.0028/MWh from a presently unknown point*.
In July this year, the Government agreed the Final Investment Decision (FID) for the Sizewell C nuclear plant.
What’s the nuclear RAB scheme?
The nuclear RAB scheme is a funding model to finance the construction and operation of the Sizewell C nuclear power station, and potentially more nuclear assets in the future. The RAB model allows developers to recover their efficiently incurred costs and earn a specified allowed return (cost of capital) on the capital they invest, thereby making it easier and cheaper for those developers to raise finance and fund the investment of large capital projects.
The UK Government confirmed it will take an initial stake of 44.9% in Sizewell C alongside private firms such as La Caisse and Amber Infrastructure.
Ofgem will regulate the scheme and LCCC will collect revenues from energy suppliers to pay for it.
Sizewell C
The Government expects the construction of Sizewell C nuclear power station (built alongside Sizewell A and B on the Suffolk coast) to take around 10 years. Based on projected timelines, it should become operational in the mid-2030s and provide clean power to the equivalent of six million homes.
The Department for Energy Security and Net Zero (DESNZ) states it’s a key step towards the clean energy superpower mission. And Government analysis shows that the project could save £2 billion a year for Britain’s energy system, once operational.
What are the next steps?
The RAB levy will be applied to electricity bills from 1 November 2025, with a quarterly update (though not necessarily a change in the levy rate) from 1 January 2026. The LCCC will publish new rates ahead of each quarter, issuing new tariffs (if needed) based on the latest forecasts. However, LCCC forecasts the Interim Levy Rate to remain between £3.5/MWh and £4.5/MWh over the next 18 months, predominantly due to demand variations.
Source: LCCC. Note, the levy rate for Q4 2025 will apply from November, the second month of the quarter.
The current rates reflect forecast costs to be recovered for the construction phase of Sizewell C, which is likely to take place over the next 10 years. The RAB levy could rise significantly depending on what costs are actually incurred to complete the construction.
The short notice period for implementation of the scheme, combined with changeable rates and unknown costs beyond the forecasting periods, add to the general uncertainty around energy pricing. The addition of this entirely new levy could affect your energy bill, and impact your budgeting for 2025 and beyond.
As a consultative decarbonisation partner and electricity supplier for businesses, Drax Energy Solutions will continue analysing the latest developments and offering insights to customers and partners.
See more articles like this on our Intelligence pages.
Written and reviewed on 1 September 2025
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