The $433bn (€427bn) Inflation Reduction Act (IRA) has been welcomed by the US nuclear energy industry as “sending a clear signal that nuclear is essential to the transition toward a carbon-free economy”.
Maria Korsnick, president and chief executive officer of the Washington-based Nuclear Energy Institute, said investment and tax incentives for both large, existing nuclear plants and newer, advanced reactors, as well as Haleu (high-dosage low-enriched uranium) and hydrogen production, set nuclear energy on a level playing field, “ensuring that nuclear can form the backbone of a stable electric grid that also includes large shares of wind and solar”.
The IRA has been touted by Democrats as a way to fend off rising inflation, trim the federal deficit, and reduce carbon emissions while bolstering investments in domestic energy production and manufacturing.
It seeks to spend around $369bn towards energy and climate programmes over the next 10 years, and Democrats project that it will raise $739bn in new revenue.
Included in the proposed legislation is a “zero-emission nuclear power production credit” that provides up to 0.3 cents per kWh for energy produced from a zero-emission nuclear power facility, starting in 2024 and ending in 2032.
Nuclear Industry Has Faced Economic Challenges
The proposed $15 per MWh credit for existing nuclear plants is estimated to cost $30bn over a 10-year-period, but will gradually decrease as power prices rise above $25 per MWh, according to the NEI, which said the credit programme is an “historic step forward in addressing the economic hurdles our carbon-free nuclear plants have been facing”.
Such a credit programme could help president Joe Biden in meeting his ambitious climate goals, which include reaching net zero emissions economy-wide by no later than 2050.
The US has the largest commercial nuclear power plant fleet in the world, with 92 reactors that can generate approximately 95,522 MW of electricity, and nuclear power accounts for roughly 20% of annual US electricity generation.
However, in recent years the US nuclear power industry has faced a string of economic and financial challenges, and around a quarter of the nation’s reactors are at risk of retiring in the 2030s, depending on natural gas prices, according to an analysis by Rhodium Group.
The research company said the IRA puts the US in “a strong position to meet the president’s goal of 100% clean generation in 2035”, partly by preventing 10-20 GW of nuclear from retiring through 2030. Twenty gigawatts would represent about 20% of the current fleet.