Nuclear supporters rally around tax credit as Congress grapples with Biden agenda


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The Public Service Enterprise Group’s Hope Creek facility in New Jersey is one of many U.S. nuclear power plants to receive state-issued zero-emission credits as Congress considers federal tax incentives for existing nuclear power plants.
Source: Public Service Enterprise Group Inc.

The US nuclear power industry is pushing for a proposed tax credit for existing power plants to ease financial pressure on the industry as it struggles to compete with abundant natural gas production and growing renewable production. But if that effort fails, a massive infrastructure bill in Congress includes what members of the industry see as more modest support for ailing nuclear power plants.

A proposed production tax credit, or PTC, for nuclear power plants has been included in the budget reconciliation program that Democrats in the United States House of Representatives have developed to help implement the Build program. Back Better from President Joe Biden. The bill would provide a base credit rate of 0.3 cents / kWh hour and a bonus credit rate of 1.5 cents / kWh for electricity produced from an eligible nuclear facility, with the credit reduced. as the selling price of electricity from this plant increases.

The PTC issuance could provide vital financial support to the nuclear fleet, which provides about 20% of the United States’ total electricity production and more than half of the country’s carbon-free production. Despite pressure from the Biden administration and some states to decarbonise the electricity sector, around 31.8 GW of nuclear capacity is at risk of withdrawing prematurely or shutting down in the coming years, according to statements from plant owners compiled by S&P Global Market Intelligence.

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“The most impactful thing Congress can do to help ensure the survival of the existing nuclear fleet is to pass the production tax credit,” said President and CEO of Public Service Enterprise Group Inc. Ralph Izzo in a statement sent by email.

A combination of high operating costs, depressed electricity prices in wholesale markets, and competition from gas-fired power plants and renewables have weighed on the nuclear energy economy. Plant owners have also blamed the lack of or inadequate policies to reward zero carbon energy for undervaluing the benefits of nuclear power.

David Brown, senior vice president of government affairs and public policy for Exelon Corp., said the PTC “really provides the long-term certainty needed to keep these factories in operation.” In terms of policies before Congress, “the PTC has really been the goal of the industry and what we’re most passionate about,” Brown said.

PSEG owns the 1,172 MW Hope Creek Nuclear Generating Station in New Jersey and, with Exelon, are co-owners of Units 1 and 2 of the 2,295 MW Installation of Salem in the state. In April, the New Jersey Public Services Board voted to extend state subsidies for zero-emission certificates for Hope Creek and Salem, otherwise the PSEG had said the two factories would have to close.

The infrastructure bill could be a “safety valve”

The promulgation of the reconciliation bill is far from assured. Progressive and moderate Democrats disagree on the total price of the legislation, as well as its energy provisions. The fight over the reconciliation package is also delaying a separate infrastructure bill that the Senate passed in August with bipartisan support.

If the reconciliation package fails but infrastructure legislation succeeds in passing the House, a nuclear power incentive package contained in the Infrastructure Bill could offer assistance to vulnerable power plants. Infrastructure legislation includes a $ 6 billion program for nuclear units in commercial electricity markets threatened with closure. Credits would be allocated over a four-year period and cannot exceed the projected average annual operating loss of an eligible plant, in dollars per megawatt hour.

The program was modeled on the legislation that the US Senator. John Barrasso, R-Wyo., Presented the last Congress when he was chairman of the Senate Committee on the Environment and Public Works, according to Brown. The bill, which was passed by the committee with bipartisan support, would direct the US Environmental Protection Agency to establish a credit program for nuclear reactors threatened with shutdown due to economic factors.

Senator Joe Manchin, DW.Va., who chairs the Senate Committee on Energy and Natural Resources, has previously co-sponsored legislation to create a nuclear PTC. But the Senate Energy Committee lacks jurisdiction over the EPA and fiscal policies, so Manchin included a nuclear credit program in the infrastructure bill that was similar to Barrasso’s proposal but managed by the US Department of Energy, according to Brown.

By adding this proposal to the infrastructure bill, Manchin has created a “safety valve” for the nuclear industry if the reconciliation package stalls, Brown said.

Federal credits could be used to reduce payments to nuclear power plants under state zero-emission credit programs or other state-based clean energy initiatives. As a result, the program “may alleviate some of the pressure on states” that subsidize nuclear power and “really socialize the cost of keeping nuclear online,” said Lillian Federico, research director for energy for Regulatory Research Associates, a group within S&P Global Market Intelligence.

If enacted, the infrastructure legislation could also support two Ohio nuclear power plants that were to receive $ 150 million in grants under a now repealed state nuclear credit program, according to Federico. In late March, Ohio Governor Mike DeWine signed a bill ending the $ 9 / MWh credit to the 908 MW Davis-Besse and 1,268 MW Perry nuclear power plants in response to a alleged corruption scheme behind the passage of the state. subsidy law.

Nuclear power plant operators in Maryland and Pennsylvania might also be interested in the infrastructure bill’s credit program, as those two states do not have subsidy programs for nuclear power facilities, Federico said.

The production tax credit still in the spotlight

Despite a potential lightening of the infrastructure bill, Brown said Exelon was “not so enthusiastic” with the legislation compared to the TPC proposed in the reconciliation package. The governor of Illinois recently signed a bill providing $ 700 million in five-year grants to Exelon nuclear power plants of 2,346 MW in Byron, 1,805 MW in Dresden and 2,384 MW in Braidwood in the ‘Illinois. If the state had not done so, Exelon said the infrastructure package credit program would not be enough to save the factories in Byron and Dresden.

“I think the nuclear subsidy program [in the infrastructure bill] is very well intentioned, but somewhat below what the industry needs to support the existing fleet, ”said Brown.

The Institute of Nuclear Energy said the infrastructure bill expands support for nuclear power in several areas, including funding the DOE’s Advanced Reactor Demonstration Program and hydrogen demonstration projects that could take place in nuclear facilities. But the group still considers a nuclear PTC as the top priority.

“While the Senate infrastructure package is a welcome step forward, further steps need to be taken through the reconciliation bill’s nuclear generation tax credit which will go even further to conserve our park existing nuclear power plant and effectively overcome the economic obstacles facing our carbon-free nuclear power plants. “said John Kotek, senior vice president of policy development and public affairs at NEI.

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