A major economic bill directed to the president has ‘game-changing’ incentives for the nuclear power industry, experts say, and those tax credits are even greater if a facility is located in a community where a plant is located. on solid coal.
Companies that design and build the next generation of nuclear reactors could choose one of two new tax credits available for carbon-free electricity producers, such as wind and solar. To ensure coal communities have a place in the energy transition, both tax credits include a 10 percentage point bonus for facilities located where residents have relied on fossil fuel power plants or mining.
That could include coal-dependent West Virginia towns since the state lifted a ban on nuclear power plants this year. Or in Maryland, where the state announced a partnership in June to consider reallocating a fossil fuel site to a small nuclear reactor. Or in Montana, where lawmakers are considering advanced nuclear reactors as a possible replacement for coal-fired boilers.
Staffan Qvist, an expert in energy systems analysis and decarbonization strategies, has conducted extensive research on the feasibility of replacing coal-fired power plants with emission-free alternatives in China and Poland. He found that coal-fired power plants often provide ideal sites for advanced high-temperature nuclear reactors.
“It’s a growing trend,” said Qvist, who is also founder of Qvist Consulting Limited in the UK. “You have a site, you have a connection to the network. You have equipment that can stay in service and you have a workforce that could be retrained.
There are nearly $375 billion in climate incentives in the Cut Inflation Act. Among them is a new tax credit available to any carbon-free electricity producer. This includes new advanced nuclear reactors that will begin construction in 2025 or later. Existing nuclear power plants that increase their production could obtain a credit for this additional electricity production. The credit is worth at least $25 per megawatt-hour for the plant’s first decade of operation, according to NEI, the industry trade association.
Or, owners of a new carbon-free electricity generator could take advantage of an investment tax credit, worth 30% of the amount they paid to build the facility.
The bill also provides $700 million to produce the uranium fuel in the United States that many advanced reactors need. And there’s a tax credit for existing nuclear power plants worth up to $15 per megawatt-hour from 2024 to 2032.
The incentives are a game-changer for the nuclear power industry, said Jacopo Buongiorno, professor of nuclear science and engineering at MIT.
“It’s really substantial,” he said as he read the list of tax credits. “That should move things forward in terms of making these technologies economically viable from the get-go.”