New CNC draft guidance out as first-round decision nears

The Department of Energy released draft guidance for the second award cycle of the $6 billion Civil Nuclear Credit (CNC) Program on September 30, ahead of a decision on which reactors could receive four years of economic aid from the program's first award cycle.

The DOE's draft guidance for the second award cycle describes CNC program timelines and all supporting information required for owners or operators of nuclear power plants to apply for certification of eligibility and submit sealed bids. Feedback is requested by 5:00 p.m. EDT on November 4. While no date has been set for the second-round application process to open, the DOE plans to initiate the award cycle before the end of the year.

"DOE remains committed to supporting the nation's current fleet of nuclear power plants to meet President Biden's grid reliability and climate goals, and we welcome all feedback to the draft guidance for the next group of CNC program applicants," said Jennifer Granholm, U.S. secretary of energy. The program is managed for the DOE by the Grid Deployment Office.

What has changed? The draft guidance describes the timelines, deliverables, and supporting information needed from eligible owners or operators of nuclear power reactors that are projected to shut down due to economic circumstances within the next four years.

A set of FAQs lists notable updates for the second award cycle, which include the following:

• Requiring that a reactor is projected to cease operations within the four-year award period, but not requiring that applicants have publicly announced intentions to cease operations.
• Providing additional details on how the Production Tax Credit (PTC) can be accounted for in revenue information, and how PTC and state support payments will be treated in the annual adjustment of CNC payments.
• Shifting the CNC program to be administered on a calendar year rather than a fiscal year basis.
• Maintaining a single submission of both certification applications and sealed bids from applicants, as in the first award cycle. (Previously, CNC guidance indicated that future award cycles would include two separate submissions for certification applications and sealed bids.)
• Requiring a Justice40 Initiative Plan to provide an overview of benefits to disadvantaged communities.

More on eligibility: The DOE expects some reactors to be eligible for both the PTC, which is available to power reactors generating energy between 2024 and 2032, and the CNC program. Eligibility for the CNC program is narrower and is open only to reactors that compete in a competitive electricity market and are projected to cease operation due to economic factors. The owner or operator must also prove that air pollutants would increase over the award period if the reactor closed.

While there is no requirement that reactors be fueled by U.S.-origin uranium to qualify for the CNC program, under the Bipartisan Infrastructure Law the DOE must "give priority in certification to a nuclear reactor that uses, to the maximum extent available, uranium that is produced, converted, enriched, and fabricated into fuel assemblies in the United States," according to the guidance. An applicant must provide "known information on the source of produced uranium, and the location where the uranium is converted, enriched, and fabricated into fuel assemblies" for the anticipated four-year award term.

Round one: Applications for the CNC program's first award cycle closed on September 6. Thursday, October 6, is the earliest date that conditional award decisions could be publicly announced. There is, however, no commitment from the DOE to announce those awards by a particular date.

"DOE will announce any conditional awards as soon aspossible [DOE emphasis], but no earlier than 30 days after the closure of the application period on September 6, 2022," according to the FAQs. "A conditional award announcement will include the number of credits allocated and the average $/MWh credit price. If no conditional awards are made, this decision would also be announced. DOE will not publicly announce applicants whose reactors are not certified or not allocated credits."