Released February 21, 2022 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The bipartisan infrastructure bill signed into law by President Joe Biden last November contained a provision for $6 billion in credits over four years to keep financially challenged nuclear power plants operating. On February 11, the Department of Energy (DOE) began implementing the Civilian Nuclear Credit Program (CNCP), with a press release seeking applications for up to $1.2 billion of credits this fiscal year, as well as input on how the program should be structured.
A dozen nuclear power plants have closed since 2013, the DOE said. According to its Notice of Intent/Request for Information (NOI/RFI) published February 15 in the Federal Register, "multiple (other) zero-emission nuclear generation assets are at risk for early closure." Nuclear power accounts for about 52% of the nation's carbon-free electricity, and further closures would undermine the Biden administration's goal of making the electricity sector carbon-free by 2035.
Referring to the 12 nuclear plants that have been closed since 2013, the NOI/RFI stated, "closures have resulted in increased air pollution in communities, including disadvantaged communities, where fossil generation has replaced lost nuclear generation, materially impeded the national goal of carbon pollution-free electricity by 2035, and cost the nation thousands of high-quality union jobs. Further closures threaten to exacerbate these issues."
Several states, including New York, Illinois and Ohio, have passed measures to provide financial support to keep open economically challenged nuclear plants. But uneconomic plants in other states, including in Massachusetts, Vermont, Iowa and Nebraska, have closed because operators determined low power prices and high operating costs made those units uneconomic.
"U.S. nuclear power plants are essential to achieving President Biden's climate goals and DOE is committed to keeping 100% clean electricity flowing and preventing premature closures," said Secretary of Energy Jennifer Granholm said in a February 11 statement. "The Bipartisan Infrastructure Law makes this all possible by allowing us to leverage our existing clean energy infrastructure, strengthen our energy security and protect U.S. jobs. DOE is facilitating the development of next-generation technologies that can ultimately lower emissions and bolster the clean energy workforce."
To be eligible for these credits, asset owners must prove that their reactor will close for economic reasons and demonstrate that closure will lead to a rise in air pollution, including carbon dioxide (CO2) emissions. DOE also must determine that the U.S. Nuclear Regulatory Commission has reasonable assurance that the reactor will be able to continue operate safely. Credits will be allocated over a four-year period beginning on the date of selection to reactors that are certified by the department.
U.S. Senator Joe Manchin (Democrat-West Virginia), chairman of the Senate Energy & Natural Resources Committee, said: "I appreciate that the Department of Energy is taking this first crucial step to implement the Civil Nuclear Credit Program authorized and funded under the Bipartisan Infrastructure Law. Ensuring the continued operation of our domestic nuclear fleet is essential to achieving our emission reduction goals, while also maintaining reliability. I fought for the inclusion of this critical program to prevent further premature closures of nuclear power plants and to maintain high-paying jobs in communities across America."
In its February 11 NOI/RFI, the energy agency noted that nuclear plants that had not received state-level financial aid would be prioritized over those that have, such as ones owned by Exelon Corporation (NASDAQ:EXC) (Chicago, Illinois). The agency is authorized to disburse up to $1.2 billion in credits this fiscal year, which ends September 30. The agency proposed a structure and operation of the program and is seeking public comment on its proposal.
DOE requires operators seeking grants to confidentially submit detailed financial information and projections demonstrating a plant's economic unviability. But the agency will monitor the financial health of the awardees. If conditions change and an uneconomic plant becomes economic, the DOE will have the ability to recover a portion of its credits.
"In the event that actual economic performance during the period is such that the nuclear reactor did 'not operate at an annual loss in the absence of an allocation of credits,' " the NOI/RFI stated, "DOE (will) recapture allocated credits. As a means to reduce the need for recapture, it may be appropriate for DOE to create an annual settlement mechanism through which the value of a reactor's credit allocation would be adjusted based on the bundle of market prices to which it is exposed. In this manner, several state zero emissions credits (ZEC) programs use market indices to adjust ZEC values."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
A dozen nuclear power plants have closed since 2013, the DOE said. According to its Notice of Intent/Request for Information (NOI/RFI) published February 15 in the Federal Register, "multiple (other) zero-emission nuclear generation assets are at risk for early closure." Nuclear power accounts for about 52% of the nation's carbon-free electricity, and further closures would undermine the Biden administration's goal of making the electricity sector carbon-free by 2035.
Referring to the 12 nuclear plants that have been closed since 2013, the NOI/RFI stated, "closures have resulted in increased air pollution in communities, including disadvantaged communities, where fossil generation has replaced lost nuclear generation, materially impeded the national goal of carbon pollution-free electricity by 2035, and cost the nation thousands of high-quality union jobs. Further closures threaten to exacerbate these issues."
Several states, including New York, Illinois and Ohio, have passed measures to provide financial support to keep open economically challenged nuclear plants. But uneconomic plants in other states, including in Massachusetts, Vermont, Iowa and Nebraska, have closed because operators determined low power prices and high operating costs made those units uneconomic.
"U.S. nuclear power plants are essential to achieving President Biden's climate goals and DOE is committed to keeping 100% clean electricity flowing and preventing premature closures," said Secretary of Energy Jennifer Granholm said in a February 11 statement. "The Bipartisan Infrastructure Law makes this all possible by allowing us to leverage our existing clean energy infrastructure, strengthen our energy security and protect U.S. jobs. DOE is facilitating the development of next-generation technologies that can ultimately lower emissions and bolster the clean energy workforce."
To be eligible for these credits, asset owners must prove that their reactor will close for economic reasons and demonstrate that closure will lead to a rise in air pollution, including carbon dioxide (CO2) emissions. DOE also must determine that the U.S. Nuclear Regulatory Commission has reasonable assurance that the reactor will be able to continue operate safely. Credits will be allocated over a four-year period beginning on the date of selection to reactors that are certified by the department.
U.S. Senator Joe Manchin (Democrat-West Virginia), chairman of the Senate Energy & Natural Resources Committee, said: "I appreciate that the Department of Energy is taking this first crucial step to implement the Civil Nuclear Credit Program authorized and funded under the Bipartisan Infrastructure Law. Ensuring the continued operation of our domestic nuclear fleet is essential to achieving our emission reduction goals, while also maintaining reliability. I fought for the inclusion of this critical program to prevent further premature closures of nuclear power plants and to maintain high-paying jobs in communities across America."
In its February 11 NOI/RFI, the energy agency noted that nuclear plants that had not received state-level financial aid would be prioritized over those that have, such as ones owned by Exelon Corporation (NASDAQ:EXC) (Chicago, Illinois). The agency is authorized to disburse up to $1.2 billion in credits this fiscal year, which ends September 30. The agency proposed a structure and operation of the program and is seeking public comment on its proposal.
DOE requires operators seeking grants to confidentially submit detailed financial information and projections demonstrating a plant's economic unviability. But the agency will monitor the financial health of the awardees. If conditions change and an uneconomic plant becomes economic, the DOE will have the ability to recover a portion of its credits.
"In the event that actual economic performance during the period is such that the nuclear reactor did 'not operate at an annual loss in the absence of an allocation of credits,' " the NOI/RFI stated, "DOE (will) recapture allocated credits. As a means to reduce the need for recapture, it may be appropriate for DOE to create an annual settlement mechanism through which the value of a reactor's credit allocation would be adjusted based on the bundle of market prices to which it is exposed. In this manner, several state zero emissions credits (ZEC) programs use market indices to adjust ZEC values."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
