SPECIAL REPORT | CLOSING THE CIRCLE Closing the circle The UK has an investment fund whose proceeds will pay for


decommissioning its reactors. The fund has become a key investor in Sizewell C. Is this a virtuous nuclear circle?


THE UK’S NUCLEAR LIABILITIES Fund Ltd announced plans in June last year to invest £400m (US$543m) in financing the construction, development and 60-year operation of a new nuclear power station at Sizewell C on the Suffolk coast. The organisation is working with Amber Infrastructure Group, and it is investing alongside the UK government, EDF, Centrica, La Caisse and International Public Partnerships Limited. For the fund, investing in new-build will become a revenue stream that will underwrite its clean-up activities. The National Liabilities Fund (NLF) was established in 1996, when the country’s nuclear generating company, British Energy was privatised and arrangements had to be made to fund decommissioning liabilities that would satisfy potential investors. British Energy was responsible for the costs of removing and storing spent fuel. It also set aside and ring-fenced funds to decommission eight nuclear power stations (those currently operated by EDF Energy). Previously, the nationalised Central Electricity Generating Board (CEGB) owned all the country’s nuclear stations and their liabilities sat with the government. When British Energy was restructured in 2005, the government assumed responsibility for its nuclear liabilities, including any shortfall in the NLF. Further cash injections have been provided by the UK government to ensure the sufficiency of the fund. The fund was set up with an initial endowment of £260m


($353m) from government and a plan for regular payments into it by British Energy, to be invested for growth to meet future costs. Now it is the owner of the UK’s Advanced Gas-cooled Reactor (AGR) fleet and Sizewell B, EDF Energy is required to make ongoing contributions on an annual and quarterly basis and when fuel is loaded at Sizewell B.


The assets of the Nuclear Liabilities Fund are split into two


parts. The majority of the fund’s assets used to meet current and near-term liabilities are held in the government’s central National Loans Fund (NatLF), where cash can be accessed at short notice and its security is backed by the government. This allows the Trustees greater freedom in investing


the balance of the fund in the Mixed Assets Portfolio (MAP), which aims at long-term growth. It is expected that by the early 2050s the National Loans Fund will be fully utilised and the MAP will meet the remaining liabilities. The NatLF investment is the larger of the assets at


present, but NLF says as the near-term liability payments are made and the MAP grows “this dynamic will become more balanced”. The costs of decommissioning are likely to change in the long term as the costs of labour, materials and evolving technology change. The NLF Trustees estimate how much return will be needed to meet the liabilities and design an investment strategy which targets this rate of return. The investment manager will diversify investments across different types of asset, which are expected to react differently across the range of long-term economic scenarios. The current forecast is for the MAP to be valued at over £30bn ($41bn) in today’s money when the fund’s holding in the NatLF is exhausted in around 30 years’ time. The MAP will continue to grow whilst being used to meet decommissioning costs, in anticipation of the increased rate of expenditure on decommissioning at the start of the next century Importantly, the ability to use NatLF to meet near-term


costs means that the MAP can have what it describes as a ‘high appetite for illiquidity’. The ‘illiquidity premium’ in capital markets means that there is a higher rate of return


The UK’s Nuclear Liabilities Fund Ltd is to invest in the construction, development and operation of Sizewell C. Source: Arup


32 | March 2026 | www.neimagazine.com


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