How the infrastructure bill could change DOE, nuclear, grid

By Edward Klump, Carlos Anchondo, Miranda Willson, David Iaconangelo | 11/11/2021 07:08 AM EST

Steam billows from the cooling towers at Exelon Corp.'s nuclear power generating station. Scott Olson/Getty Images

The Department of Energy vowed yesterday to start a $6 billion nuclear credit program within about four months to help keep U.S. reactors operating, fulfilling a mandate of the bipartisan infrastructure bill President Biden plans to sign Monday.

Plant owners and operators will have to submit applications to show a need and to ensure taxpayers’ money would be well spent, Jeremiah Baumann, DOE’s deputy chief of staff, told reporters yesterday. More details will be released in the coming weeks and months about the process and how money will be allocated, he said. The program could run for five years.

“It’s designed to support those nuclear facilities that need economic support in order to keep operating and keep providing the benefits of that emissions-free power to communities across the country,” Baumann said. “So it’s not sort of a universally available automatic piece that goes out to anyone.”

He spoke during a DOE briefing intended to spotlight key energy components of the infrastructure bill, which the House passed Friday after months of negotiation (Energywire, Nov. 8). The Biden administration is pitching the benefits to help win public support as questions remain about high energy prices.

In Baltimore yesterday, Biden called the bill “a once-in-a-generation investment to create good-paying jobs, modernize infrastructure, turn the climate crisis into an opportunity.”

The larger “Build Back Better Act” still pending in Congress could provide even more benefits to the nuclear industry if it becomes law and includes a production tax credit for operating nuclear plants.

Reactors remain a critical piece of the grid, and the U.S. Energy Information Administration said nuclear comprised nearly 20 percent of the nation’s electricity generation mix last year. But nuclear also remains controversial among critics who cite operational safety concerns and the need to store radioactive waste.

Some advocates have questioned giving economic aid to reactors that could affect prices for other power generators or delay renewable energy expansion. A number of reactors have closed or announced plans to shutter in recent years, and some states have sought to provide aid to keep them running.

The Electric Power Supply Association, which represents competitive electricity suppliers, declined to comment yesterday on the nuclear credit program in the recent infrastructure bill. But EPSA has said subsidies for existing nuclear sources such as zero-emissions credits would “distort market outcomes, inhibit private development of clean energy alternatives and divert government funds away from research and development for nascent advanced nuclear technologies.”

Baumann told reporters, however, the United States “can’t afford to have this setback of losing a lot of carbon-free electricity” from a climate standpoint, noting it’s a “top priority” to keep the country’s nuclear fleet operating “wherever appropriate and safe” as additional clean energy is added.

Matt Crozat, senior director of policy development at the Nuclear Energy Institute, said it’s “real progress” to see the federal government put billions of dollars in place to address the potential closure of nuclear plants. It “shows just how far we’ve come in appreciating the role that nuclear energy is going to play in a low-carbon future,” he said.

It’s not clear how the nuclear credit program and a possible new production tax credit would work together over several years, but one plant may not be able to receive both. The production tax credit could be a “cleaner” policy tool, Crozat said, and its value may be reduced to zero if a plant’s revenues are high enough.

Lukas Ross, climate and energy justice program manager at Friends of the Earth, expressed opposition to the nuclear credit program and the potential nuclear production tax credit.

“Nobody is saying that every reactor needs to close tomorrow, but in situations where the reactors can be replaced safely with renewables and efficiency, that’s the course that should be taken,” Ross said.

While the infrastructure bill had some support from Republicans, others have criticized its size or the focus of planned spending. Florida Gov. Ron DeSantis, for instance, was quoted by WPTV as saying the bill was “pork-barrel spending,” suggesting his state’s share was unfair.

Besides nuclear, DOE highlighted investment plans in the bill ranging from more than $7 billion for the supply chain for batteries to $3.5 billion tied to a weatherization assistance program. It said $11 billion would be invested in grants for states, tribes and utilities to bolster the resilience of the power grid against events such as cyberattacks and extreme weather.

The department also said $21.5 billion would be available for funding clean energy demonstrations and research hubs. That money touches areas such as clean hydrogen, advanced nuclear and carbon capture, direct air capture, and industrial emissions reduction.

DOE said yesterday that it plans to add about 1,000 workers as it seeks to implement aspects of the infrastructure bill.

Asked yesterday about criticisms that carbon capture prolongs the life of fossil fuels, DOE pointed to the role that the technology can play in decarbonizing sectors like cement, chemicals and steel.

Those sectors “don’t have readily available alternatives to quickly replace fossil fuels, and so we are going to advance a lot of these solutions to make sure that we are making progress in every part of the economy where we’ve got to reduce emissions, and protect and create new, good-paying industrial jobs,” Baumann said.

 

‘Historic’ grid investment

The electric grid is key to reducing greenhouse gas emissions across the U.S., according to experts.

The infrastructure bill could be a critical first step for modernizing and upgrading the grid, as the plan allocates billions of dollars toward developing new electric transmission lines, enhancing the existing transmission system, and encouraging regulators to prepare for expansive changes in energy resources and consumption needs. Even so, funding may only cover a fraction of the expected costs of building out the power grid to support both carbon-free electricity and zero-emissions transportation and heating.

One section of the bill establishes a $2.5 billion loan program to boost the construction of new electric power transmission lines, or help repair existing lines. Projects that use so-called grid-enhancing technologies would be prioritized. The bill also adds $3 billion in funding to an existing program at DOE that seeks to modernize the electric transmission and distribution systems.

Grid-enhancing technologies refer to a range of tools that can make the grid system more reliable and flexible, including to make it better able to respond to the ebbs and flows of solar and wind resources.

These technologies will also be important for maintaining a reliable electric system as more people switch to electric vehicles and electric heating, said Karen Wayland, CEO of the GridWise Alliance.

“It’s a historic investment in grid upgrades to enhance resilience, reliability and security, and it’s going to help transform the grid into one that can accommodate these low-carbon goals,” Wayland said.

Other notable provisions aren’t tied to new funding, but could still be significant, observers say. For example, the bill gives the Federal Energy Regulatory Commission the ability to overturn states’ objections to critical new transmission projects, although some FERC commissioners appear more open to using that authority than others (Energywire, Sept. 8).

State regulators and energy offices will also be compelled to consider setting up new programs to advance demand response and electric vehicle deployment, which could help reduce greenhouse gas emissions from the electricity and transportation sectors, respectively.

Yesterday, Energy Secretary Jennifer Granholm was in Delaware to announce that DOE has upgraded a million U.S. homes with energy efficiency improvements via the Home Performance with Energy Star program. Since 2001, that program “has helped American homeowners and renters save $7.7 billion on their energy bills and cut carbon emissions equivalent to a year’s worth of 11 coal-fired power plants,” DOE said in a statement.

 

Building ‘the first ones’

One of the bill’s hallmarks is a focus on emerging technologies.

Tens of billions of new funds will flow into DOE’s coffers, much of it destined to help young companies scale up everything from long-duration storage and hydrogen to carbon capture, direct air capture and small modular nuclear. And new offices will open within the department to carry out that mission, such as the Office of Clean Energy Demonstrations, which will get $21.5 billion to oversee expensive new pilot projects.

DOE is no stranger to stewarding along new technology. Tesla Inc., the EV colossus valued at more than $1,000 a share, traces its origins to a $465 million government loan in 2010, which it used to open its first assembly plant in Fremont, Calif.

Now, the infrastructure bill is effectively tasking the department with repeating that success story, many times over.

It responds in part to calls from innovation advocates and former DOE officials, who’ve argued that the feds need to do far more to bring emerging technologies into the wider market.

Those arguments have been buttressed by some evidence showing DOE’s lab-stage work on clean energy often doesn’t translate into real-world breakthroughs.

A study published last year, for instance, showed that startups backed by DOE’s Advanced Research Projects Agency-Energy were twice as likely as their competitors to receive a patent, but no better at reaching commercialization (Energywire, Sept. 15, 2020).

Innovation advocates have found a willing ear in the Biden administration and several Senate Republicans. It remains to be seen how their ideas will play out through the lens of the country’s riven politics, however.

The Tesla success story, after all, has its inverse: The 2011 bankruptcy of Solyndra, a solar manufacturer that got a $535 million loan guarantee from the same DOE branch, known as the Loan Programs Office (LPO). Conservatives lambasted the Obama administration for squandering public funds on what they viewed as vanity clean energy projects.

Today, the LPO is in the black, thanks to the broader success of its portfolio. But the Solyndra fiasco slowed the office’s work to a near halt, particularly under the Trump administration, which made awards to only one venture, the Plant Vogtle nuclear project in Georgia.

Much of the technology that will get attention from DOE, like hydrogen and carbon capture, is unpopular with environmental justice advocates, who have cried foul at the administration’s plans to deploy the tech in front-line communities.

That may set up debates in the Democratic Party over the department’s big-ticket energy demonstrations.

“Summing up the idea of the demonstrations, to reach our net-zero goal we have to replicate these huge [projects] dozens and hundreds of times across the country,” said Christopher Davis, senior advisor to the DOE secretary, during a media call about the bill yesterday.

“Someone has to build the first ones, to show that it can be done,” he added.

Reporter Jeremy Dillon contributed.