Overview of Section 45U - Zero-Emission Nuclear Power Production Credit

The Section 45U tax credit is a federal initiative to incentivize electricity production at qualified nuclear power facilities. This credit specifically targets existing nuclear power plants that were operational at the time of enactment and are not eligible for the 45J advanced nuclear production tax credit.

Key Features of the Section 45U Tax Credit:

  • Direct Pay Eligibility: Tax-exempt organizations, states, political subdivisions, the Tennessee Valley Authority, Indian Tribal governments, Alaska Native Corporations, and rural electricity cooperatives are eligible to receive direct payments, which facilitates more accessible access to this credit's benefits.

  • Transferability: The tax credit is transferable, providing flexibility in its utilization and financial planning for eligible entities.

  • Stackability: Facilities eligible for the 45J tax credit cannot claim the 45U credit. Additionally, any financial support received from federal, state, or local zero-emission nuclear subsidies will proportionately reduce the amount of the 45U credit.

  • Energy Community Bonus: No bonus is available for projects located in energy communities under this section.

Detailed Provisions:

  • Period of Availability: The credit is applicable for electricity produced and sold from January 1, 2024, through December 31, 2032. This timeframe aligns with the tax years during which the credit can be claimed.

  • Tax Mechanism: The credit is structured as a production tax credit, providing a direct incentive based on the quantity of electricity generated.

  • Base Credit Amount: The initial rate is set at 0.3 cents per kilowatt-hour (kWh), with provisions for inflation adjustment starting in 2025. The credit amount is also subject to reduction based on the nuclear facility's total energy output and gross receipts.

  • Bonus Credit Amount: A significant increase of five times the base credit is available if the facility meets prevailing wage requirements for workers involved in alteration or repair operations.

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