A little-known change tucked into the Inflation Reduction Act is a game changer for supporting mega-scale clean electricity technologies like nuclear, geothermal, and hydro.

Qualified Progress Expenditures (QPE) enable eligible projects to earn the investment tax credit while under construction even before the project is complete while it is under construction. This is a significant benefit for megaprojects like nuclear which can take five to ten years to complete construction.

Typically, project sponsors need to take out large loans to finance the construction of the plant. Paying back the interest on these loans can dramatically increase the overall cost of a project. DOE’s Advanced Nuclear Liftoff report demonstrates how even a 5-year construction period can add an additional 22% in capitalized interest to the overall capital cost of the project.

Given the often large budgets in the billions of dollars, the lengthy construction time, and the fact that the projects don’t earn any revenue until completed, anything that can reduce the size or duration of a construction loan can add up to major savings.

Other details guiding the use of QPE:

• Public power and other not-for-profit organizations are eligible for QPE and elective pay tax credits. That means entities like the Tennessee Valley Authority and Energy Northwest could make use of QPEs.
• Tax credits earned via QPE are not eligible for credit transfer. The entity earning QPE credits must either make full use of them or carry them forward.
• Credits earned via QPE are clawed back if the project is abandoned. Project sponsors will need to cover this risk under insurance or some other type of product.

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