US approves tax credits for advanced nuclear projects

14 February 2018

The USA on 9 February extended production tax credits for advanced nuclear power plants under a wide-ranging tax reform bill signed into law by President Donald Trump. The Bipartisan Budget Act of 2018, H.R.1892, passed the Senate by a vote of 71–28 and the House of Representatives, 240–186 ending an overnight government shutdown and preventing a longer one. The two-year budget deal increases the statutory caps on discretionary spending for defence and domestic programmes. 

The nuclear production tax credit is considered essential for completion of US plants already under construction and first-of-a-kind small modular reactor (SMR) construction. Nuclear production tax credits were set up under the 2005 Energy Policy Act to provide federal support for projects such as the construction of Georgia Power's Vogtle 3&4. The credit was set at 1.8 cents per kilowatt-hour of electricity over eight years, subject to limitations. To be eligible plants were required to enter commercial operation by the end of 2020. However, the Vogtle units are not expected to begin producing power until 2021 and  2022.

Under section 40501 of the new law, reactors entering service after 31 December 2020 can qualify for the tax credits, and the US Energy Secretary can allocate credits for up to 6000MWe of new nuclear capacity entering service after 1 January 2021. It also allows public entity partners in the projects – such as Vogtle's minority owners Oglethorpe Power, MEAG Power and the city of Dalton – to transfer their credits to partners.

Georgia Power's recommendation to continue with the construction of the two AP1000 reactors at Vogtle, following contractor Westinghouse's Chapter 11 bankruptcy filing in March last year, was approved by the state's public service commission in December. The new law further reduces the risk for the continuing construction of the units, for which the company also holds more than $5bn in anticipated loan guarantees from the Department of Energy. Federal support and "constructive legislation" continue to be important to the project's success, the company said.

The two Vogtle units will now be eligible for the tax credits, as well as other projects, such as NuScale Power's plans to build its first commercial SMR plant at the Idaho National Laboratory by 2026. "Both projects will serve as anchors for energy infrastructure…as they generate carbon-free electricity, spur economic growth and support a diverse and reliable electric grid for decades to come," said Maria Korsnick, president and CEO of the US Nuclear Energy Institute.

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