Augustine Beach, Delaware 7-14-2014 The Salem Nuclear Power plant located at the Hope Creek Generating Station in New Jersey as seen from across the Delware Bay in Augustine Beach. Credit: Mark Reinstein (Photo by Mark Reinstein/Corbis via Getty Images)
Mark Reinstein | Corbis Historical | Getty Images
The sweeping
Overall, the provisions in the law could decrease greenhouse gas emissions
It also includes significant benefits for the nuclear industry, as energy generated with nuclear reactors generates no greenhouse gases. Nuclear advocates are celebrating the law as a win.
“For years, the nuclear industry and advocates have been pushing for a more level playing field and equal treatment with other clean energy sources on a tax and federal subsidy basis,”
Here’s an overview of how the climate bill will impact the nuclear sector.
Production tax credit for existing nuclear power plants
Starting in 2024 and running through 2032, utilities will be able to get a credit of $15 per megawatt-hour for electricity produced by existing nuclear plants. If the price of power rises above $25 per megawatt-hour, then the credit will gradually decrease, but it doesn’t phase out completely until energy prices reach around $44 per megawatt-hour, explained
“Every plant is different and some plants have a different revenue model but we can say that this credit will offer a reprieve from the low revenues that had forced more than a dozen reactors to close,” Crozat told CNBC.
To be eligible for the full $15 per megawatt-hour base tax credit, a nuclear power plant operator has to pay workers operating and doing maintenance on the power plant “prevailing wage requirements,” according to the
Production tax credit for advanced nuclear power plants
Several companies in the United States are working to commercialize new nuclear power plant designs that are meant to be safer and with a smaller capacity, making them ideally cheaper to build and maintain as well.
For example,
Advanced nuclear reactors could benefit from the IRA by way of
Worth noting, there’s another Advanced Nuclear Production Tax Credit already on the books. That tax credit was established in the Energy Policy Act of 2005 and is for $18 per megawatt-hour for the first eight years that a nuclear power plant is operating, provided the nuclear power plant had not begun construction when the 2005 bill was signed into law, Crozat told CNBC. The third reactor unit of the Vogtle Power plant being constructed in Georgia will be the first power plant to take advantage of the 2005 Advanced Nuclear Production Tax Credit, according to Crozat.
A company can not take advantage of both tax credits — it has to pick. Going forward, the tax credits in the IRA just signed into law will be more attractive. “Since the new production tax credit has been indexed to inflation and last for two additional years, it will be considerably more valuable than the older version,” Crozat told CNBC.
Aerial view of the Diablo Canyon, the only operational nuclear plant left in California, viewed in these aerial photos taken on December 1, 2021, near Avila Beach, California. Set on 1,000 acres of scenic coastal property just north and west of Avila Beach, the controversial power plant operated by Pacific Gas & Electric (PG&E) was commisioned in 1985.
George Rose | Getty Images News | Getty Images
Investment tax credit for new nuclear power plants
New nuclear power plants are eligible for claiming an Investment Tax Credit made available through the new law for facilities that generate energy with zero emissions and that go into service in 2025 or after.
The investment tax credit allows a nuclear power plant to get a tax credit for 30 percent of what was invested in building the zero-emissions energy production facility, which includes nuclear power plants, according to the
The investment tax credit is increased by 10% for locating the zero-emissions power source where a coal plant previously lived. It starts to phase when carbon emissions from the sector are 75 percent lower than 2022 levels.
Money to spur innovation
The law includes
The existing fleet of nuclear power reactors in the United States operate on uranium that has been enriched up to 5%. HALEU fuel has been enriched between 5% and 20%. Many advanced reactor designs are smaller builds than conventional nuclear reactors and so to make a nuclear reactor smaller, they need to get more power from smaller quantities of fuel,
“Right now, the only commercially available source of HALEU is from the Russian federation and the support for HALEU in the IRA signals an understanding that the federal government is needed to jumpstart domestic enrichment capabilities to support the coming wave of new nuclear technologies,” Rampal told CNBC.
It’s also just the first step, Rampal said. The nuclear industry needs multiple billions of dollars to invest in HALEU production over the next ten years, he told CNBC.
The IRA also includes $150 million for the Office of Nuclear Energy through 2027, according to the
Production Tax Credit for producing clean hydrogen
The IRA includes a tax credit for the clean production of hydrogen worth up to $3 per kilogram of hydrogen produced in a way that does not emit any greenhouse gasses. The tax credit would be available for 10 years, according to the
Nuclear energy can be used to produce hydrogen with no carbon emissions, Crozat told CNBC.
“The current way of making it from natural gas results in a lot of carbon emissions which is a big drawback if the reason for turning to hydrogen is to reduce emissions from industry and heavy transportation,” Crozat told CNBC. “The Department of Energy is funding two demonstration projects to produce hydrogen from currently operating nuclear plants. We could see the first kilograms produced later this year or early next.”
To be eligible for the maximum tax credit, the facility has to be under construction before 2033 and generate no more than 0.45 kilograms of carbon dioxide equivalent per kilogram of hydrogen produced and that must be measured and tracked with a a lifecycle assessment, the Nuclear Energy Institute says. The tax credit phases out if a hydrogen production facility generates more than 6 kilograms of carbon dioxide equivalent per kilogram of hydrogen.
Also, to be eligible to receive the maximum value of the tax credit, a facility has to meet “prevailing wage requirements” or the maximum credit is $0.60 per kilogram of hydrogen produced, according to the Nuclear Energy Institute.
Tax credits for making component parts
The IRA includes a manufacturing production provision which allows for a tax credit for component parts produced and sold after 2022, according to a
This credit is not only for the nuclear industry, but it can be applicable, according to Morgan Lewis’ analysis of the new law. The specific credit depends on the type of component part produced and sold. For some parts, there is a gradual phase out of the credit from 2030 through 2033, Morgan Lewis writes.
Similarly, the IRA law includes an extension of the
Source Link: https://www.cnbc.com/2022/08/22/what-the-climate-bill-does-for-the-nuclear-industry.html