Under a budget bill signed into law by US President Donald Trump on Friday (February 9), production tax credits for advanced nuclear power plants will be extended.
The Bipartisan Budget Act of 2018, which also includes defense and domestic spending, along with funding for healthcare and infrastructure, gained bipartisan support.
The tax credit extension is seen as essential to the completion of US nuclear power plants already under construction, and for first-of-a-kind small modular reactor (SMR) construction.
When the tax credits were first created they were set at 1.8 cents per kilowatt hour of electricity over eight years. To be eligible for the credit, plants were required to enter commercial operation by the end of 2020.
The Vogtle plants are not expected to commence service until November 2021 (unit 3) and November 2022 (unit 4). Under the new law, reactors commencing service after December 31, 2020 will be able to qualify for tax credits. Additionally, the US energy secretary will now be able to allocate credits for up to 6,000 MWe of new nuclear capacity that enters service after January 1, 2021.
The extension will also allow public entity partners in the projects — such as Vogtle’s minority owners — to transfer their credits to other partners.
Speaking about the decision to extend the tax credit deadline, a representative for Georgia Power stated, “[w]e are grateful to Senator Isakson for his leadership on this issue, and to the entire Georgia delegation for recognising the importance of new nuclear generation and demonstrating renewed federal support for the Vogtle project. At Georgia Power, we are focused on delivering value to our customers every day and we’re committed to completing these new units.”
Georgia Power is a subsidiary of Southern Company (NYSE:SO). Another nuclear project that will benefit from the extension is NuScale Power, which plans to build its first commercial SMR plant by 2026. Both projects will generate carbon-free electricity and are seen spurring economic growth. It is theorized that they will also support a diverse and reliable electric grid for decades to come.
Passing this law is a positive step for the Trump administration, which has been vocal about its desire to save coal and power plants. In early 2018, efforts hit a snag when an independent energy panel rejected Trump’s plan to bolster coal-fired and nuclear power plants. The decision was unexpected, and the government has been working steadily since then to get the initiative back on track.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.