Update on developments in energy transition in the UK

Part 3 - Nuclear energy and Great British Energy

The UK is undergoing a significant transformation in its nuclear energy strategy, marking what the government has described as a “golden age” for the sector. As part of its broader Plan for Change, the UK government has committed to substantial investment and regulatory reform aimed at accelerating the deployment of nuclear technologies and reinforcing energy security.

A cornerstone of this strategy is the final investment decision for the Sizewell C nuclear power station, announced in July 2025. The project, backed by £14.2 billion in funding, is expected to deliver clean electricity to six million homes and support up to 10,000 jobs during peak construction. The government will become the largest shareholder in the project, alongside EDF, Centrica, La Caisse, and Amber Infrastructure. This marks the most significant public investment in clean energy in the UK in decades and is projected to generate £2 billion in annual electricity system savings once operational.

Sizewell C is designed as a virtual replica of Hinkley Point C, but with a 20% reduction in construction costs. The project will be financed through a combination of public and private investment, including debt guarantees and equity stakes, with the National Wealth Fund (NWF) playing a central role in providing capital. The Regulated Asset Base (RAB) model will be used for the first time in UK nuclear development, with Ofgem acting as the regulator and the Low Carbon Contracts Company overseeing revenue collection. The RAB model was introduced through the Nuclear Energy (Financing) Act 2022, which provides the statutory basis for its application to new nuclear projects. Unlike the previous Contracts for Difference (CfD) model, where developers bore all construction risk and only received revenue post-commissioning, the RAB model allows designated nuclear companies to recover costs during construction via regulated charges on consumer energy bills.

To qualify for RAB funding, a nuclear company must hold an electricity generation licence and be formally designated by the Secretary of State. This designation is contingent upon two legal tests: the maturity test, which assesses the project’s readiness, and the value for money test, which evaluates its economic justification. Once designated, the company’s licence is modified to include bespoke conditions governing revenue recovery, cost adjustments, and regulatory oversight.

In parallel, the government is advancing the deployment of Small Modular Reactors (SMRs), having selected Rolls-Royce SMR as the preferred bidder to build the UK’s first reactors of this kind. A recent agreement with the Czech Republic aims to foster international collaboration and unlock export opportunities in SMR technology.

The UK is also positioning itself as a global leader in fusion energy. It will be the first country to introduce fusion-specific planning rules, integrating fusion projects into the Nationally Significant Infrastructure Project regime. This reform is intended to streamline planning processes, provide clarity to developers, and accelerate the deployment of fusion technologies. Over £2.5 billion has been committed to fusion research and development, including the STEP programme, which aims to build a world-leading fusion power plant by 2040 in Nottinghamshire. 

To support these ambitions, the government has established the Nuclear Regulatory Taskforce, which is reviewing the UK’s regulatory framework to identify barriers to innovation and delivery. Its interim report calls for a “once-in-a-generation” reset of nuclear regulation, citing excessive complexity, duplication across regulators, and outdated planning laws as key impediments. Final recommendations are expected in autumn 2025 and are likely to inform future legislative and policy changes.

Great British Energy 

Great British Energy (GBE) is a publicly owned clean energy company, formally established under the Great British Energy Act 2025. Although wholly owned by the government, GBE operates with full operational independence and is set to receive £8.3 billion in funding over the course of the current Parliament. 

The GBE’s mission is to power Britain with clean, secure, home-grown energy and to position itself as a global leader in the clean energy sector. In pursuit of this goal, GBE is prioritising investment in emerging technologies, scaling up mature solutions, and supporting municipal and community energy initiatives. These efforts will be carried out in partnership with energy companies, local authorities, and cooperatives. Central to this approach is the Local Power Plan, announced in September 2025. Through this initiative, GBE will work with local councils, energy groups, and mayoral authorities to support community-led energy projects, helping households and public buildings generate their own clean power and reinvest savings locally.

GBE is also working in close partnership with Great British Energy – Nuclear (GBE-N), formerly known as Great British Nuclear. As two allied, publicly owned entities, GBE and GBE-N share a common mission to accelerate the deployment of clean energy across the UK. GBE, as the parent organisation, will lead on broader clean energy development, while GBE-N will provide specialist expertise for the UK’s nuclear programme, with a particular focus on the SMR initiative.

A key part of GBE’s role is to support the government’s Clean Power 2030 objectives. This includes backing community renewable energy projects and identifying new sites for energy generation on both public and private land. GBE’s investment activities will be supported by the NWF, and the company will act as a developer, owner, and operator of energy projects, either independently or in collaboration with other stakeholders.

Significant funding has already been allocated to strengthen domestic offshore wind supply chains. In April 2025, £300 million was announced, followed by a further £700 million committed through partnerships with the Crown Estate and industry. GBE’s strategic priorities, published in September 2025, reaffirm its objectives and set a target for the company to become self-financing and begin generating returns by 2030. Within six months of publishing its strategic priorities, GBE is required to produce its own strategic plan.

As a publicly owned entity, Great British Energy is subject to the public procurement regime under the Procurement Act 2023, which came into force in February 2025. This is intended to place GBE within a transparent and accountable framework for awarding contracts and managing public funds. 

Summary

2025 has so far seen substantial movement across the UK’s clean energy landscape, with new regulatory frameworks, funding mechanisms, and strategic plans introduced for hydrogen, carbon capture, nuclear, and public energy initiatives. While these developments reflect a clear policy direction toward decarbonisation and energy security, many schemes remain in early stages, with implementation timelines extending into the next decade. Legal practitioners will be instrumental in navigating the evolving regulatory and commercial frameworks, advising clients on compliance, risk allocation, and contractual structuring as the sector matures.

This article was co-authored by trainee Morgan MacWilliams.