The Inflation Reduction Act, released July 27th, includes a “zero-emission nuclear power production credit.” The tax credit was originally proposed in the Build Back Better Act. The new bill lowers the amount of credits facilities can claim slightly and makes the credits available for 10 years until 2032 instead of 5 years.

The tax credit, which will become section 45U of the tax code if the bill is enacted, would add to the existing suite of federal subsidies for nuclear energy, including the 45J production tax credit for any new nuclear plants that come online. The 45U tax credit would act as a general income supplement for existing nuclear power facilities making less than a set amount, many of which also qualify for the $6 billion civil nuclear credit program created by the infrastructure package (P.L. 117-58, Infrastructure Investment and Jobs Act).

The credit as proposed would provide:

• 0.3 cents x kilowatt hours of electricity produced and sold to an unrelated person exceeding the “reduction amount.”
• The “reduction amount” is the lesser of 0.3 cents x kilowatt hours or 80% of the difference between the gross receipts and 2.5 cents x kilowatt hours. In effect, the reduction amount phases out the credit for plants that earn more income from electricity sales.
• If the facility complies with new prevailing wage and apprenticeship requirements, the credit amount is multiplied by 5 for a max credit of $15/megawatt hour of electricity sold.

The credits will not be available for any advanced nuclear facility placed in service between 2005 and 2021, which would qualify for 45J nuclear production tax credit instead. The 45U credits are available till the end of 2032. Under this proposal, nuclear facilities with receipts of less than $25/MWh would be eligible for the full tax credit of $3/MWh. Nuclear facilities with receipts of $25/MWh to $28.75/MWh would be eligible for a partial tax credit. And nuclear facilities with receipts of over $28.75/MWh would not be eligible. The Congressional Budget Office (CBO) estimated that the new 45U credit would cost taxpayers $30 billion over the next 10 years.