A two-year budget deal was approved by the House and the Senate this morning and signed by President Trump a few hours later. The budget (PDF) included a slew of tax credit extensions that will affect how the energy industry plans its next two years.
Most notably, the deal extended a $0.018 per-kWh credit for nuclear power plants over 6,000MW—a tax credit that is primarily going to benefit one project in the US. That project is the construction of two new reactors at the Georgia Vogtle nuclear power plant. Vogtle’s future was uncertain last year after reactor designer Westinghouse went bankrupt. The plant’s reactors, which are now billions of dollars over budget, are not expected to be in service until 2021 and 2022 at the earliest. Before this budget deal, new nuclear plants would have had to be in operation before 2020 to take advantage of a key federal tax credit.
Georgia’s public utilities commission approved a deal to move forward with the project in December, provided the federal government extend the in-operation date for the federal tax credit. With this morning’s budget deal, it seems that Vogtle will go ahead, unlike its sibling site in South Carolina, whose parent company is planning to shut it down and explore a merger with energy company Dominion.
Utility Dive notes that the tax credits could also help small modular reactors (SMRs), which Energy Secretary Rick Perry has advocated for throughout his tenure.
Carbon capture
Interestingly, a bipartisan effort to increase and extend tax credits for carbon sequestration passed through this budget. The bill was pushed through by Senators Heidi Heitkamp (D-N.D.), Shelley Moore Capito (R-W.V.), Sheldon Whitehouse (D-R.I.), and John Barrasso (R-Wyo.). The bill would offer a tax credit per ton of carbon dioxide that is captured and either sequestered, used for another end product, or used for enhanced oil recovery. The credit applies to any facility that started carbon capture construction within the past seven years, and the credit extends for 12 years.
There aren’t many carbon capture facilities in the US—just last year Southern Company decided to end development of coal gasification connected to a carbon capture system at its Kemper plant, which was a major blow to the technology. Instead, Kemper has decided to burn relatively cleaner natural gas instead of gasifying coal and capturing the CO2 from it.
Despite carbon capture’s struggles and the efficiency reductions that are associated with the process, a slew of Senate Democrats from Michael Bennet (D-Colo.) to Cory Booker (D-N.J.) supported the bill. In a press release, the sponsoring senators stated that the bill would “provide a crucial lifeline to coal miners by providing a pathway to maintain coal as a part of our diverse energy mix, doing so in a cleaner way, and reinforcing bipartisan support for standing up for these workers and their communities.”
Rhode Island Senator Whitehouse, who was a sponsoring member of the bill, is somewhat of an outlier among the bill’s sponsors since Rhode Island is one of two states in the US that has no coal-fired generation whatsoever. In a statement, the senator said, “This is a big win for our climate and the promising new carbon capture and utilization technologies looking to gain a foothold in the market… And it takes a key step forward in combating climate change by putting a dollar value on reducing carbon pollution.”
Alternative vehicles
While the budget deal leaves the federal tax credit scheme for electric vehicles unchanged (automakers can still entice buyers with a $7,500 credit for the first 200,000 electric vehicles that roll off that automaker’s line), the budget did include and extend some interesting tax credits for other kinds of non-traditional energy.
Fuel cell vehicles saw an extension of tax credits that will allow purchasers of new cars a tax credit of between $4,000 and $40,000, depending on the weight of the vehicle (this is probably good news for potential customers of Nikola’s in-development fuel-cell semis). Non-hydrogen alternative fuel infrastructure also scored, as the new budget lets installers of infrastructure for alternative fuels like biodiesel and natural gas deduct 30 percent of the cost of installing the new pumps.
Two-wheeled electric vehicle buyers will also see a 10-percent credit extended (though that credit has a $2,500 cap). Per-gallon biodiesel and renewable diesel credits that expired at the end of 2017 will continue.
Other winners
Five-year extensions of tax credits were also granted to installers of Combined Heat and Power (CHP) turbines as well as micro turbines, which have the potential to play a big role in developing microgrids across the US.
Tax credits for efficient housing builders were preserved, as well.
The budget also included $2 billion to restore Puerto Rico’s electric grid, which is still not fully operational months after Hurricane Maria hit the island in September.
According to Greentech Media, there was one cutting-edge energy tech that didn’t get its wishes granted in this new budget deal: energy storage. Battery installers can’t avail themselves of an Investment Tax Credit, and they will have to forge ahead without a discount from the government for the time being.
https://arstechnica.com/?p=1257595