Incentives Included in the American Power Act

The American Power Act, as proposed by Senators Joe Lieberman and John Kerry contains significant incentives for new nuclear plant research and construction that could have a broad impact on the Idaho National Laboratory and could spur construction of new nuclear power plants with the expansion of tax credits and the addition of a grant program that could fund up to 10 percent of a new nuclear power plant’s costs.

The full text of the nearly 1,000-page bill can be found here.

As provided at this location, a summary shows what the bill could do for nuclear power generation:

• We have included a broad package of financial incentives to increase nuclear power generation including regulatory risk insurance for 12 projects, accelerated depreciation for nuclear plants, a new investment tax credit to promote the construction of new generating facilities, $54 billion in loan guarantees and a manufacturing tax credit to spur the domestic production of nuclear parts.
• We improve the efficiency of the licensing process.
• We invest in the research and development of small, modular reactors and enhanced proliferation controls.
• We designate an existing national laboratory as a nuclear waste reprocessing Center of Excellence.

The last bullet is of particular significance for the Idaho National Laboratory, because it’s likely either the INL or Hanford would be designated as the “nuclear waste reprocessing Center of Excellence.” And, given Washington State’s reluctance to see an expanded role for Hanford and Idaho’s continuing support of the INL, politically it makes sense for the INL to receive this designation.

Additionally, the INL currently has a highly-trained workforce already familiar with nuclear waste handling and reprocessing.

Other significant nuclear-related mileposts in the bill include:

A new research initiative meant to explore modular and small-scale reactors (think SL-1 but without the subsequent hijinks), cost-effective manufacturing and construction, licensing and proliferation controls. The last item is highly political but an interesting inclusion, as the proliferation genie already seems to have escaped the bottle.

A requirement that 180 days after the bill is passed, the Department of Energy develop and publish a 5-year strategy to “lower effectively the costs of nuclear reactors, with yearly follow-ups.” Appropriates $50 million a year fro 2011 through 2015 for this plan and research. Again, significance here for the research side of the INL, where similar research efforts are already underway.

Puts in place a 10 percent tax credit for new nuclear plants – 10 percent of qualified power facility construction expenditures. The credit would be received in the year the plant it put into service. To qualify, at least 80 percent of the cost of the plant must be borne by the company building it.

Includes nuclear power facilities in the advanced energy project credit, which has offered credits of up to 30 percent of the costs of building or modifying plants to generate electricity from sun, wind, geothermal and other renewable energy sources. That act established a $2.3 billion pool for the credit, it’s unclear at this time if that amount would be increased or how much has already been spent.

In lieu of the tax credits, the proposed bill would establish a program for grants of up to 10 percent of project costs instead of tax credits. No appropriation limit set, but the bill does say “there is hereby appropriated to the Secretary of the Treasury such sums as may be necessary to carry out this section.”

So there appear to be significant carrots tossed to those engaged in nuclear power research and construction. It’ll be interesting to see how the bill plays out and how it survives the legislative process.

More significantly, it’ll be interesting to see how the nuclear industry can defend inclusion of these items in the bill and to emphasize nuclear’s role in reducing carbon emissions while at the same time addressing the legitimate problem of waste control. That waste reprocessing is included in the bill is significant, as that topic has been off the table politically for more than 30 years. It’s a significant carrot nuclear proponents can use as they stress the renewability of nuclear as a power-generating option.

What’ll be interesting to see is if the reprocessing is left to the government do handle through the Department of Energy – which seems likely as a reprocessing “center of Excellence” is to be designated if the bill is passed – or if private enterprise will be allowed to enter the game. Certainly companies like Areva, which is poised to build a $2 billion uranium processing plant in Eastern Idaho, are supremely placed to engage in reprocessing. The nonproliferation aspect, however, is one that will drive whether reprocessing is kept in government hands or opened to private enterprise, as is the question – albeit unlikely – of terrorist strikes.