Regulated Asset Base Model
Regulated Asset Base Model
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Sizewell C, UK Page Credit: Sizewell C
INPP has played a leading role in deploying capital into Regulated Asset Base (RAB) projects through landmark investments in Tideway and Cadent and its upcoming investment in Sizewell C. The RAB model is a proven and effective framework for financing essential infrastructure by balancing value for money for consumers with stable, long-term returns for investors. By optimising the cost of capital, the RAB model largely de-risks the delivery of large, capital-intensive projects.
Related
Tideway
Cadent
Sizewell C
Funding critical infrastructure and enhancing investment returns through the RAB model
Alongside these benefits, private sector participation brings a diversity of expertise and financial discipline. Effective across sectors such as water, energy and transport, the RAB model facilitates the efficient delivery of major construction projects that might otherwise have been delayed, scaled back or faced cost overruns under more traditional government-led approaches. With the UK seeking to modernise critical infrastructure and deliver on ambitious net zero and energy security goals, the need for long-term, reliable investment frameworks has never been greater.
The RAB model is a government-backed framework that balances value for consumer with fair, stable returns for investors. It works across both construction and operational phases.
Key features - construction phase
- Fixed, inflation-linked, regulated returns from day one of construction, reducing development risk and the cost of borrowing, encouraging long-term investors to participate in complex projects.
- Lower overall cost of capital by sharing construction risks between government, investors, and consumers.
- Private sector expertise helps deliver projects more efficiently than traditional government-led approaches.
- Enhanced protection through Government Support Packages (GSP): additional safeguards are built in for investors in extreme downside scenarios, such as severe delays or cost overruns.
- The RAB model has been adapted for greenfield projects like Tideway and Sizewell C, which include a construction phase.
Sizewell C, UK
Photo credit: Sizewell C
Key features - operational phase
- Fixed, regulated returns on the asset base, typically reviewed every five years by the relevant regulator (e.g. Ofgem, Ofwat) to ensure it reflects a fair, market level of compensation.
- Inflation-linked revenues that protect investors’ real returns over time.
- Optimised risk profile compared with demand-based or unregulated assets, with a predicable income profile, that further supports INPP's dividend coverage over the longer term.
- Built-in caps, incentives and support packages provide private investors with greater certainty, attracting a wider range of long-term investors whilst harnessing their expertise and delivering efficiency at an optimal cost to the consumer.
- Strong consumer safeguards through stable and transparent regulatory framework, ensuring value for money.
- RAB-based investments such as Cadent, Tideway and Sizewell C (operate, or will operate, under this model once they are operational.
Cadent, UK
Supporting INPP’s return objectives
The RAB model aligns closely with INPP’s long-term investment strategy and the interests of its investors:
- Cash flow predictability: Return profile underpinned by a clear regulatory framework, delivering immediate, stable and inflation-linked cash flows through economic cycles.
- Dividend cover support: Long-term, predictable income profile contributing to INPP’s dividend coverage.
- Risk mitigation: Reduced construction and operational risk through regulatory protections and government support mechanisms.
- Portfolio diversification: RAB assets offer differentiated risk-return characteristics relative to availability-based or demand-based infrastructure investments and provide low correlation to economic cycles.
- Access to unique assets: RAB investments support large-scale, essential infrastructure with high barriers to entry and long-term relevance.
- Capital growth potential: RAB investments can provide opportunities for long-term capital appreciation alongside strong yield, with mechanisms to insulate investors from downside risks.
The right model for today’s challenges
- Driving economic growth: Projects supported by the RAB model, given incomparable scale and long-term useful lives, support domestic industries, jobs, innovation and regional development.
- Supporting Net Zero: The RAB model has enabled the delivery of major green infrastructure, such as Tideway and now Sizewell C, which directly contributes to decarbonisation in the UK.
- Bridging the infrastructure funding gap: With public finances under pressure, the RAB model allows the government to leverage private capital for critical infrastructure, reducing reliance on taxpayer funding.
- Healthy future pipeline: Several major planned infrastructure projects in the UK are considering RAB as a financing model. As a proven investor and steward of critical RAB infrastructure assets, INPP is well placed for future procurements into this tried-and-tested regulatory regime.
- An exportable model: The UK’s adaptation of the RAB model is anticipated by many experts to become an international blueprint for funding future large-scale infrastructure beyond the UK.
INPP's track record with RAB investments
Through its Investment Adviser, INPP is one of a few infrastructure investors with a proven track record managing regulated assets under the RAB model.
Since 2015, INPP has invested or committed to invest in:
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2025
2017
2015
Across these projects, INPP has invested to support regulators and government to deliver public-private partnerships that balance returns with long-term impact.
Nuclear power generation – Sizewell C
Nuclear power is critical to the UK’s energy security and decarbonisation goals. The RAB model is being applied for the first time in nuclear at Sizewell C, offering a more effective framework than traditional models for long and complex construction programmes.
Why the RAB for nuclear works for investors:
- Regulated returns from day one of financial close
- Predictable, long-term and inflation-linked cash flows from day one of financial close
- Opportunity for significant capital growth as construction milestones are achieved
- Fixed, early-stage returns during construction / early operations, expected to deliver a low-teen IRR
- Backed by Ofgem and government support mechanisms, allowing to share costs and risks between investors, consumers and the government
- Private investor governance with robust minority protections
Key facts:
- Asset ownership: Minority stake alongside UK Government and other private investors
- Status: Construction underway, financial close and revenue commencement targeted for Q4 2025, operations expected in late 2030s
- Revenue structure: RAB-based, inflation-linked model regulated by Ofgem
- ESG impact: net-zero aligned baseload power generation; 3.2 GW capacity (≈7% of UK demand) with expected 60+ year operational life
Gas distribution - Cadent
Cadent owns and operates four of the UK’s eight regional gas distribution networks, serving approximately 11 million customers.
Key facts:
- Asset ownership: Minority stake in consortium-led vehicle since 2017
- Status: Operational, INPP acquired its interest in 2017 when Cadent was fully operational
- Revenue structure: RAB-based, inflation-linked model regulated by Ofgem
- ESG impact: Transitioning to low-carbon hydrogen-ready infrastructure
Wastewater management - Tideway
Tideway is the 25km super sewer running beneath London, designed to clean up the River Thames and provide critical wastewater resilience for decades to come.
Key facts:
- Asset ownership: Minority stake via regulated vehicle since 2015
- Status: Construction complete, now in commissioning phase
- Revenue structure: RAB based, inflation-linked model regulated by Ofwat
- ESG impact: Cleaner rivers, better public health outcomes