After Hitachi suspended plans to build Wylfa Newydd nuclear power plant, the UK government is exploring the idea of a regulated asset base funding model – but what is it? A RAB model is used to incentivise private investment into public projects by providing a secure payback and return on investment for developers. Within this mechanism, energy companies manage the infrastructure project, taking ownership of the assets and operating costs. In return, they will be able to raise revenue, often through customer bills, and can also be offered government subsidies. This guarantees a longer rate of return, which reduces the risk on investment for capital intensive projects — such as the construction of power plants. For customers, they can expect a more reliable power supply and better quality service due to new investments.
Compelo 22nd Jan 2019 read more »