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Incentives for Energy Production

A History of Energy Incentives

All electric generating technologies have received various levels of financial incentives from the federal government. For decades the government has provided incentives to support research, development and deployment of energy technology. The types, amounts and targets of federal incentives have changed substantially over time. There has been a common perception that incentives for nuclear have been at the expense of renewable energy sources, such as wind and solar. However, an analysis by Management Information Services Inc. shows that over the last 60 years that has not been the case.

 

 

Source: 60 Years of Energy Incentives: Analysis of Federal Expenditures for Energy Development

Incentives for New Nuclear Plants

New nuclear power plants are large, capital-intensive projects. Financing these projects will be a challenge for the U.S. electric industry, since the size of the projects is large relative to the size of the electric companies that build them. In some cases, these projects will require financing support from the federal or state governments.

Federal policymakers have recognized that nuclear energy is a wide-ranging value proposition and have supported nuclear plant construction. The Energy Policy Act of 2005 provided limited investment stimulus for construction of new baseload power plants. That stimulus includes production tax credits for new nuclear plants, investment tax credits for advanced coal-based projects, and authorization for a loan
guarantee program within the Department of Energy to support financing and commercial deployment of innovative technologies that reduce emissions.

State policymakers have also implemented legislation or regulations that support construction of nuclear power plants. One such infrastructure financing tool is called "construction work in progress," which supports new reactor construction by allowing recovery of financing costs during construction. This process also reduces the cost of electricity to consumers. For more, see NEI’s paper, Construction Work in Progress: An Effective Financial Tool to Lower the Cost of Electricity.

Additional Resources

What Are the Major Differences Between Renewable and Nuclear Loan Guarantees