Nuclear Power, Carbon Capture Winners in New Budget Deal

The budget bill passed by Congress and signed by President Trump in the early hours of February 9 extends a host of tax credits for energy technologies, including provisions to help the Vogtle nuclear expansion in Georgia as well as U.S. carbon-capture projects.

The legislation also provides support for renewable energy, including for small wind turbines and geothermal pumps. It also gave five-year tax credit extensions to small natural gas technologies, including combined heat-and-power (CHP) and microturbines, along with fuel cells.

The Senate version of the bill reportedly included proposals to boost offshore wind energy, energy storage, waste heat to power, and large-scale geothermal generation projects. None of those efforts survived in the House and are not included in the final legislation.

The bill also includes $2 billion to help with rebuilding the electricity grid in Puerto Rico, where about 30% of the island remains without power after hurricanes Irma and Maria battered the Caribbean last September. Those funds are part of $89 billion in disaster funding for U.S. areas that sustained damage from hurricanes and wildfires over the past year. It also includes a number of energy credits for businesses and homeowners that were left out of the two most-recent tax bills passed by Congress.

The legislation continues the Trump administration’s support for nuclear and coal-fired power generation. The credit for nuclear power production extends the in-service deadline for reactor projects past year-end 2020. Currently, the $0.018/kWh production tax credit for nuclear plants requires that a facility must be in-service by December 31, 2020; the extension says that after January 1, 2021, “the Secretary of the Treasury [can] re-allocate any of the national 6,000 megawatt capacity that is unused, first to qualifying facilities to the extent such facilities did not receive an allocation equal to their full capacity, and then to facilities placed in service after such date.”

The only U.S. nuclear project under construction, the two-reactor expansion at the Vogtle plant in Georgia, is expected to be placed into service in 2021 and 2022 and would now be eligible for up to $2 billion in incentives, according to a Bloomberg analysis. The nuclear production tax credit was initially approved by Congress in 2005. Extending the credit was a key consideration for the Georgia Public Service Commission (PSC) when it voted unanimously in December to allow Georgia Power and its three utility partners to complete the $25-billion Vogtle project.

The Trump administration already has promised $3.7 billion in new loan guarantees to help complete the Vogtle reactors.

Paul Bowers, chairman, president and CEO of Georgia Power, in a statement Friday praised Georgia Republican Senator Johnny Isakson for spearheading the effort to extend the production tax credit.

“We are grateful to Senator Isakson for his leadership on this issue, and to [Republican] Senator David Perdue and the entire Georgia delegation, for recognizing the importance of new nuclear generation and demonstrating renewed federal support for the Vogtle project,” said Bowers.

Tim Echols, vice chairman of the Georgia PSC, on Friday told POWER: “I am grateful that Senators Isakson, [Tim] Scott and [Lindsey] Graham led the way in extending the 2020 in-service deadline for nuclear facilities like our Plant Vogtle so the project continues to qualify for tax credits. Without these credits, our Vogtle project was in jeopardy and fringe technologies like carbon capture, combined heat and power, fuel cells, solar water heaters, and geothermal heat pumps probably don’t thrive in the U.S. market.”

Scott and Graham are Republican senators from South Carolina. That state continues to be dogged by the fallout of its failed nuclear project, the two-reactor expansion at the V.C. Summer plant that was abandoned last summer. State lawmakers are squabbling over a bill that would determine whether customers of South Carolina Electric & Gas (SCE&G) will continue to pay for costs of the Summer project, which accounts for about one-fifth of customers’ monthly electric bills. Gov. Henry McMaster has said he will sign the bill, which would cut off payments for the project while the courts and state regulators decide who should pay for the unfinished reactors.

Nuclear Energy Institute President and CEO Maria Korsnick said the bill’s passage was “a vote for continued American leadership in nuclear energy.” She noted it would help both Vogtle, and a small modular reactor project in Utah from NuScale Power.

The budget bill also includes a tax credit for carbon-capture projects, and it has bipartisan support. The provision, known was 45Q, has several co-sponsors including Sens. Sheldon Whitehouse (D-R.I.), John Barrasso (R-Wyo.), Shelley Moore Capito (R-W.Va.), and Heidi Heitkamp (D-N.D.). North Dakota is testing carbon-capture projects at the Energy and Environmental Research Center at the University of North Dakota.

Another co-sponsor of the legislation is Senate Majority Leader Mitch McConnell, the Kentucky Republican whose state’s economy has long been dependent on coal. Coal-fired generation accounts for about 90% of electricity production in the state.

Only two carbon capture and sequestration power plants are currently in operation worldwide: the Petra Nova plant in Texas, POWER’s Plant of the Year in 2017, and the Boundary Dam plant in Saskatchewan, Canada, near the North Dakota border. Boundary Dam was named POWER’s Plant of the Year in 2015. A third project, at the Kemper County plant in Mississippi, never began commercial operation, as Mississippi Power suspended the gasification process and today operates the plant as a natural gas–fired combined cycle facility.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine)