Implications of Inflation Reduction Act Tax Credits for Advanced Nuclear Energy

Although the tax credits apply uniformly across clean energy technologies, the amount of the tax credit granted to any specific project depends on certain aspects of the project’s development that affect the scale of benefits that arise from the tax credits. [...] This transaction would involve the recipient paying the transferer for the use of the credit, where the payment is typically slightly less than the nominal value of the credit. [...] This approach enables an analysis of the effects of tax credits or other financial policies on the overall average cost of producing power, a metric sometimes called the levelized cost of electricity (LCOE).10 The inputs for the financial cost model in this analysis include: • Cost of constructing and operating advanced nuclear generation facilities; • The expected performance of nuclear generatio. [...] Meeting this requirement is extremely likely since the increase in the value of the tax credit (an additional 24% of construction cost for the ITC and an additional $25/MWh in the PTC) 10 While useful for comparing the impact of policies on generation technologies with similar operational characteristics, LCOE models generally are not suitable for assessing the relative value of disparate technolo. [...] The value of the LPO credit support is eroded under the ITC because the ITC reduces the amount of debt financing required by the project (debt and equity are pro-rated).