Biden administration launches $6 bln nuclear power credit program

One of the two now closed reactors of the San Onofre nuclear generating station is shown at the nuclear power plant located south of San Clemente, California, U.S., December 5, 2019.

The Biden administration on Tuesday opened applications for a $6 billion program to help nuclear power plants struggling with rising costs as it seeks to stop the generators from shutting down under its goal of transitioning to clean energy.

The U.S. nuclear power industry's 93 reactors generate more than half of the country's carbon-free electricity, according to the Department of Energy (DOE). But 12 reactors have closed since 2013 in the face of competition from renewable energy and plants that burn plentiful natural gas.

In addition, safety costs have soared after the 2011 tsunami at Japan's Fukushima plant and after the Sept. 11, 2001, attacks. The industry produces toxic waste, currently stored on site at plants across 28 states.

The DOE said it will take applications from owners of nuclear plants for the first round of funding in its Civil Nuclear Credit Program until May 19. It will prioritize reactors that have already announced their intention to close. The program, intended for plants in states with competitive electricity markets, was funded by the infrastructure bill that passed last year.

Energy Secretary Jennifer Granholm said the administration is "using every tool available" to get the country powered by clean energy by 2035, a goal of President Joe Biden's, including by prioritizing the existing nuclear power fleet.

The $6 billion in funding is designed to be distributed gradually. The DOE can appropriate $1.2 billion over the next four years with the last four-year period ending in 2035. Officials said in February they hope the program can begin to help one or more plants this year. 

PG&E, whose plan to shut its two Diablo Canyon reactors in California in 2024 and 2025 has been approved by the state legislature and regulators, indicated that the nuclear credit program would not change its plan immediately.

"As a regulated utility, we are required to follow the energy policies of the state," said PG&E spokesperson Suzanne Hosn when asked about the DOE program. "At this time, the state has not changed its position regarding the future of nuclear energy in California."

The program could help a range of utilities, including PSEG (PEG.N) and Constellation Energy Corp (CEG.O), which currently do not have plan to shut plants.

The plan was praised by Senator Joe Manchin, a conservative Democrat who has so far stymied Biden's clean energy legislation in the massive Build Back Better bill, which included billions of additional dollars in tax credits for nuclear power generation. Manchin has said in recent weeks he could go along with narrower legislation that makes investments to fight climate change.

"This program will keep our reactors operating, preserving American jobs, reducing emissions, and bolstering our energy security," Manchin said.

Source: Reuters / Reporting by Timothy Gardner; Editing by Aurora Ellis and Leslie Adler