Richard Coar
Energy & Infrastructure Partner, Linklaters, London

Richard is a partner at Linklaters with over 25 years’ experience of helping his clients to successfully develop and finance the world’s most complex and high value energy and energy transition projects, with a particular focus on offshore wind, energy from waste, and more recently carbon capture and storage, long-duration energy storage and co-located power. He is one of Linklaters’ Energy Sector Leaders, ranked Band 1 for Power, Renewables & Alternative Energy by Chambers and features in Tamarindo’s 2026 legal power list. He advises developers, investors and lenders on all the key aspects of energy transactions including the associated regulatory regimes, all types of commercial contracts (including construction, O&M, supply and offtake arrangements) and all flavours of bank/ECA/institutional financings.

Rasha Sami
Energy & Infrastructure Partner, Linklaters, London

Rasha Sami is an energy and infrastructure partner at Linklaters with 15 years’ experience advising on major projects across regulated sectors, with a particular focus on energy transition. Her practice spans policy, legislation, regulation and commercial contracts for public and private sector clients. Rasha has advised the UK Government extensively, including the Department for Energy Security and Net Zero on its new nuclear programme over an eight-year period, culminating in the £38 billion financing of Sizewell C, for which she helped design a new legislative and regulatory model. She has deep expertise in economic regulatory frameworks, advising across Regulated Asset Base models in the water, nuclear and carbon capture sectors, and specialises in first-in-market low carbon transactions, including advising Eni on its Track 1 carbon capture Transport and Storage Project.

Isabella Albani
Managing Associate — Energy & Infrastructure, Linklaters, London

Isabella Albani is a managing associate in Linklaters’ London Energy and Infrastructure team. She advises governments, sponsors and lenders on the construction, development and financing of first-of-a-kind, large-scale energy and infrastructure projects across the world. Her practice spans leading international oil and gas majors, major utilities, independent power producers and energy transition companies. She regularly acts for and opposite the world’s largest financiers, including export credit agencies, international financial institutions and investment banks. In the UK, Isabella has been central to structuring bankable, first-of-a-kind project finance solutions. As well as advising on many of the largest CfD-backed offshore wind farms, she has advised on landmark energy transition projects such as the Liverpool Bay CCS project and the Protos ERF CCS. She draws on this UK experience to help develop project finance and regulatory frameworks in other jurisdictions that are attractive to international investors and lenders.

Key Developments and Current Trends in Project Finance and Infrastructure in the UK – A Legal Perspective

Introduction

The UK is at the start of the delivery phase for the two current, sustained infrastructure investment cycles: the energy transition and the digital build-out. This, coupled with the routine cycle of upgrading and replacing more traditional infrastructure (roads, railways, social infrastructure and ageing power plants) means there is a huge amount of work to do and capital to deploy to deliver this new wave of infrastructure assets.

Whilst there currently appears to be no shortage of capital for projects (even for those deploying new technologies), in some sectors bank capital in particular has largely been concentrated on asset classes and projects which are supported by robust regulatory frameworks, particularly those which are likely to facilitate a strong pipeline of future projects.

This article discusses some of the key developments across the UK that have been shaping, and will continue to shape, the risk allocation and capital structures for this upcoming wave of projects. In the energy transition space, clear policy direction together with the development of bankable business models has helped support the success of investment in a raft of strategic projects. Digital infrastructure and traditional infrastructure are also now looking to government for additional assistance. The extent to which government is able/prepared to support future projects will have a direct impact on crowding in both the debt and equity capital that is required to fund this construction cycle.

Energy transition

The energy transition build out is an example of where the UK Government has been willing to innovate with new regulatory regimes, and reformation of existing regimes, to further its decarbonisation goals. Some of the most visible areas of UK government reform which have been implemented to reflect specific challenges in the energy transition space include:

both the evolution of the CfD regime to apply to new asset classes and the adoption of certain key CfD principles in the regulatory support regimes designed to support the deployment of the first wave of CCS emitter and long-duration energy storage (“LDES”) projects. Following a few challenging allocation rounds, according to government figures, the recent AR7 auction delivered the single biggest procurement of offshore wind energy in British and European history. The industry is hopeful that this year’s AR8 auction will continue in the same vein;

  • the planning reforms introduced under the Planning and Infrastructure Act 2025, including an overhaul to the Nationally Significant Infrastructure Projects (“NSIPs”) rules as well as a streamlined DCO consenting regime and environmental impact assessments;
  • the grid connection and infrastructure reforms enacted as part of Ofgem’s TMO4+ package to replace the “first come, first served” connections queue with a two-gate system designed to prioritise key qualifying projects and ensure that credible projects can be relied upon and banked. Whilst these reforms have not been without their challenges, they should provide clearer signals to developers of energy generation assets going forward;
  • the creation of Great British Energy, formally established by the Great British Energy Act 2025, with a mandate to develop, own and operate certain renewable energy assets, through partnerships with the private sector to co-invest in renewable energy and storage projects and building on Great British Energy Nuclear which has spearheaded investment in the small modular reactor programme; and
  • the enhancement of the National Wealth Fund (“NWF”), with its commitment to deploying its remaining capital by 2031 across its three strategic ambitions: growth opportunities on the pathway to clean energy, place-based investment across the UK, and strengthening sovereign and strategic capabilities (including critical minerals, defence, green steel and AI). With a major investment in the SZC project, NWF is also looking to provide support in the Advanced Nuclear Framework roll out for small modular reactors.

However, arguably the UK’s biggest recent success in securing private capital investment in new-build energy transition infrastructure is through its use of the regulated asset base model across a cohort of groundbreaking projects.

The most visible example of this regulatory support is the Nuclear Energy (Financing) Act 2022 (the “NEFA 2022”) which has reshaped the future financing of large-scale nuclear projects in the UK. The regulated asset base (“RAB”) model permits the licensed generation company to collect regulated revenues from consumers during the construction phase rather than only once the plant is generating – de-risking construction phase exposure for equity and debt investors and reducing the project’s overall cost of capital. The model was intended to draw in private capital that may otherwise decline to underwrite large-scale nuclear construction risk. Its success was demonstrated in the financing of Sizewell C in November 2025 with private investors taking a 55.1% stake, as well as commercial-backed lending being deployed, and continues to be considered with great interest by countries around the world who are keen to capitalise on the nuclear renaissance given the growing need for low carbon baseload power.

The RAB model used on Sizewell was deployed alongside a government support package (“GSP”) to help appropriately allocate the risk between government and the private sector. Part of the GSP included a discontinuation-and-compensation agreement under which, in specified remote circumstances, the Government pays compensation to debt and equity providers, and a supplemental compensation agreement providing “top-up” cover above required commercial insurances.

Some aspects of this GSP are also included in the new carbon Transport & Storage Regulatory Investment (“TRI”) model being deployed by DESNZ for the carbon capture transportation and storage projects. The way the GSP steps in as a “last-resort” protection against high-impact, low-probability risks which the private sector may be unwilling to underwrite for a first-of-a-kind asset is a key factor which has attracted significant private investment to this first round of TRI projects in the UK, as demonstrated by the financial close of both Track-1 projects (Northern Endurance Partnership and Liverpool Bay CCS) within the past 24 months.

Like the nuclear RAB model, the CCS regime is a good example of how careful regulatory design can minimise exposure to cross-chain risk and facilitate a reduction in government support over time. The CCS GSP provides top-up revenues where there is not sufficient supply-side demand in the early stages of the project; in parallel, the government awards a separate CfD-style two-way subsidy arrangement with the Low Carbon Contracting Company (“LCCC”) under its ICC and DPA schemes to qualifying emitter projects. This double-sided approach ensures that the emitter projects are provided with a level of revenue certainty at the same time as the T&S projects are also guaranteed a level of operating cost coverage under their RAV model (which operates similarly to the RAB model). As carbon pricing increases and the subsidies needed to pay the fees to the T&S companies reduce under the emitter contracts, so too does the government support for the T&S company revenues.

The Sizewell C and CCUS business models are also examples of where commercial lenders have been willing to take first-of-a-kind technology risk (CCS) or to finance asset classes for the first time (nuclear). Many commercial lenders have traditionally shied away from nuclear projects for policy reasons, but the right support framework has allowed commercial lenders to finance £5bn of capital needed for Sizewell C.

However, the UK government models recognise that there is still a balance to be struck with regard to sharing demand risk, which is evidenced in the delays to the Track-2 CCS projects (Acorn and Viking), in part due to emitter commitments to guarantee a minimum level of demand for the T&S networks. Similarly, the UK’s Hydrogen Allocation Round (“HAR”) Low Carbon Hydrogen Agreement (“LCHA”) model deliberately only partially supports demand volumes. Ensuring public funds are deployed to catalyse, rather than replace, private sector funding remains a key theme across the various regulatory models.

As well as having the appetite to project finance new regulatory frameworks and technologies, commercial lenders are also participating in alternative financing structures of these assets. Holdco financings (where financing is raised for the project further up the ownership structure of the project, which may be additional to financing raised at the project level and can be on a single asset or portfolio basis) and development financings (where lenders provide early financing to help projects achieve a final investment decision, at which point development financing is typically refinanced into a longer-term project financing) are becoming increasingly common. These kinds of structures are being seen, again, where the underlying asset benefits from a robust regulatory and revenue framework, particularly where lenders see a future pipeline of projects and are keen to be involved in lending to certain assets at an early stage.

“Business as usual” infrastructure

This goal can be seen in other sectors, where the government’s broader pipeline includes more projects to be developed using targeted RAB or similar models, building on the success of previous regulated assets including Thames Tideway Tunnel, Sizewell C and the carbon capture TRI projects. Roads are the newest asset to be looked at within this framework, and the Highways (Financing) Bill introduces a RAB model which will be used to support delivery of the Lower Thames Crossing project. However, signals from the government point to reduced or no GSP support across this and similar projects, with a target to deliver the project off-balance-sheet. This creates a live tension between the red lines of the Treasury balance sheet, and the level of regulatory / Government support needed to secure an investment grade rating to incentivise the type and volume of private capex investment the Government is looking for. Particularly at a time when there is increased discussion about public control and renationalisation, a minimum requirement is likely to be political risk protection.

The same question will arise across the extensive pipeline of Direct Procurement for Customers (“DPC”) and Specified Infrastructure Project Regulations (“SIPR”) projects which are essential to address water resilience issues. A number of the larger projects have been ear marked for to go down the SIPR route (i.e. delivery through an infrastructure provider supported by a RAB licence). The water sector has been under considerable strain for a number of years and investors in the UK infrastructure sector will be aware of heightened political and public scrutiny together with financial distress of certain water companies. The RAB model was first deployed in the water sector on the Thames Tideway Tunnel, and the Cunliffe report has suggested its use should be expanded, particularly for the reservoir projects which are particularly thirsty for capital. Other models, such as the DPC model used for HARP, remain in the toolbox for the delivery of smaller projects.

Also worthy of note is the limited return to PPP which has been signalled by the UK government in its “UK Infrastructure: A 10 Year Strategy”, published in June 2025. Whilst industry participants have cautiously welcomed a potential return to PPP structures, visibility on the actual shape of any new models remains outstanding and the 2025 Autumn Budget has confirmed that future use of PPPs will be confined to a deliberately narrow set of circumstances. Investors whose interests lie in these potential future projects should look carefully as the models develop; it is expected that industry consultation will be key to addressing failures of past models.

Digital infrastructure

The evolution of regulatory reform in the energy transition and infrastructure space can be contrasted with the digital infrastructure build-out, which has largely been built and financed without material government support to date.

Data centres illustrate this well. Driven by hyperscaler demand for cloud hosting (and more recently, AI-compute), the UK’s market is the largest in Europe and has to date been financed almost entirely by private capital. Self-build campuses funded on balance sheet sit alongside a mature platform market backed by infrastructure funds and private credit. Portfolio-level senior secured facilities and platform financings, underpinned by long-term contracted revenues from investment-grade hyperscaler tenants, have become a well-established bankable structure as part of the project finance market. The depth of the private funding environment has, so far, been sufficient to keep pace with demand, with UK deals routinely absorbing ticket sizes that would have been considered unusual for the asset class only a few years ago. Continued focus of institutional investors and private credit counterparties has also shaped the financing structures used – capital market solutions from the US such as asset-backed securitization and private placements are becoming ever more popular to drive further capital expansion.

A similar pattern is evident in fibre and subsea connectivity. Fibre rollout has been driven by a wave of privately-backed altnets, with the sector now consolidating around a smaller number of scaled platforms. Subsea cable investment has likewise been financed on a private, contract-backed basis, with capacity commitments and indefeasible-right-of-use (“IRU”) arrangements rather than regulated revenue streams. Other network-style infrastructure assets such as towers and EV charging networks have similarly been developed and financed on a permissive basis led by market demand.

That picture is, however, changing. Recognising both the strategic importance of digital infrastructure and the constraints beginning to limit its rate of expansion, the UK Government has taken a series of steps that mark a clear shift towards intervention. In September 2024, data centres were designated as Critical National Infrastructure (“CNI”) which, together with the Cyber Security and Resilience Bill (currently progressing through Parliament at the time of publication), brings the sector within the UK’s cybersecurity regulatory framework. The planning reforms introduced under the Infrastructure Planning (Business or Commercial Projects) (Amendment) Regulations 2026 bring nationally significant data centres into the NSIP regime, enabling developers of these projects to request determination by ministers under section 35 of the Planning Act rather than by local councils, opening a gateway for swifter consenting. This is a material change for developers who have historically been exposed to protracted and uncertain local processes and for whom time-to-power has become the critical determinant of project viability.

Grid access and congestion are perhaps the most acute practical constraints to further data centre development in the UK. Ofgem’s July 2026 consultation notes there are approximately 315 data centres in the connections queue representing around 73GW of demand, and the consultation itself considers a number of measures to impose additional hurdles for demand projects to enter and remain in connection queues, including additional termination liability and credit security as well as further progression milestones and queue management arrangements. Adding a further dimension to the debate, the Government has just announced the creation of Great British Grid, a publicly owned body sitting within Great British Energy with access to up to £4 billion of its existing budget, intended to invest in electricity network infrastructure and accelerate grid connections by driving competition alongside existing network operators. Investors in the sector will be watching government progress carefully as future development will be reliant on the ability to manage the demand project queue as well as the supply side changes under TMO4+.

Meanwhile, the availability of the electrical grid and the sources of electricity are themselves driving new responses and project structures, including co-location of data centres with power generation. Outside of the UK, Microsoft’s 20-year agreement with Constellation Energy to restart the Three Mile Island nuclear plant and Pure Data Centre Group’s activation of Europe’s first islanded data centre microgrid outside Dublin in March 2026 illustrate the scale of ambition and the range of solutions now being deployed commercially. However, as these models start to be used on a wider basis, questions arise on the allocation of risks such as project-on-project risk, access to shared infrastructure, and asset stranding concerns. From a UK perspective, regulatory treatment of dispatch and balancing, and exemptions from electricity licensing requirements under section 4 of the Electricity Act 1989, may need to be considered. The joint financing of combined generation facilities and data centres raises its own set of questions around intermittency of supply, allocation of end-to-end risks, and exit considerations.

Conclusion

Carefully-designed regulatory support and reform, not the existence or volume of subsidy, has been, and is expected to continue to be, a decisive variable in whether private capital materialises in many areas of the UK’s energy and infrastructure sector. The RAB model, adapted and layered with GSP protections in the nuclear and CCS contexts and now being extended into roads and water, has repeatedly proved itself capable of crowding in investment-grade capital into first-of-a-kind infrastructure by allocating to Government those residual risks that the market cannot itself price. CfD and CfD-adjacent revenue mechanisms have played an equally significant role in the deployment of renewable generation and, through the wider LCCC framework, will continue to do so in hydrogen, LDES and carbon capture.

The tensions that remain, however, are real and unresolved. The Treasury’s ambition to keep new projects off balance sheet will have to be weighed up against the level of Government support needed to achieve the investment-grade ratings on which competitive costs of capital depend. Demand risk in first-of-a-kind chains continues to test the boundary between catalytic and substitutive Government intervention. The shape of any renewed, albeit limited, PPP model remains outstanding and will require careful industry consultation if it is to avoid the perceived failures of past regimes. In digital infrastructure, the question of timely grid access raises a live question as to how far the UK’s regulatory toolkit needs to be extended to facilitate the continued success of a sector that has, until now, been able to finance itself without government support. Grid availability will also fundamentally underpin the ability to continue to develop the large-scale renewable energy projects on which the UK’s green ambitions have so far relied.

With so many policy areas needing critical focus, UK Government is facing a significant challenge in designing the required regulation which meets the competing demands of the public and private sector whilst maintaining the momentum it has built in attracting private sector investment.