DOE Finalizes $1.52B Palisades Loan for First-Ever U.S. Nuclear Plant Recommissioning

DOE Finalizes $1.52B Palisades Loan for First-Ever U.S. Nuclear Plant Recommissioning
Power

Marking the first-ever revival of a nuclear power plant in the U.S., the Department of Energy (DOE) on Sept. 30 finalized a $1.52 billion loan guarantee to Holtec International to support the recommissioning of the 800-MW Palisades nuclear plant in Covert Township, Michigan.

Separately, the U.S. Department of Agriculture (USDA) awarded electric cooperative Wolverine Power Cooperative $650 million in funding under its New ERA program to purchase about 435 MW of Palisade’s power to serve its members throughout rural Michigan. Hoosier Energy received a $675 million USDA award to lower the cost of purchasing the remaining 370 MW alongside 250 MW of solar power from two projects to serve members in Illinois and Indiana.

White House and DOE officials told reporters during a briefing the loan funding will be used to bolster inspections, testing, restoration, rebuilding, and replacement of existing equipment at Palisades, which was retired by its previous owner, Entergy, in May 2022.

Holtec has told POWER it is targeting the plant’s recommissioning by the end of 2025, though that is subject to licensing at the Nuclear Regulatory Commission (NRC). When reopened the upgraded Combustion Engineering pressurized water reactor (PWR) could produce baseload power until 2051.

A Major Step to Revive Nuclear

The Biden administration’s loan guarantee and supporting financing to support Palisades’ recommissioning is a deliberate signal bolstering the broader revival of the U.S. nuclear industry. As experts have noted, keeping existing nuclear plants open will be as significant as building new ones, demonstrating and deploying advanced nuclear reactor technologies, and securing an adequate nuclear fuel supply.

Earlier this year, the U.S. celebrated commercial operation of its first new-build nuclear power plant, Vogtle 3 and 4 in Georgia, two Westinghouse AP1000, in more than 30 years. But, for now, many of the country’s 94 operational reactors are slated to close by 2050 if they do not seek license renewal. So far, 87 of the 94 commercially operating nuclear reactors in the U.S. have garnered licenses to operate for up to 60 years. Eight reactors have so far secured subsequent license renewals (SLRs) from the NRC, which would extend their operating life to 80 years, while another 16 have applied for SLRs, with seven under active review).

“These renewals extend the life of reactors to 80 years and require substantial maintenance investment—about $ 1 billion per reactor,” the DOE noted on Monday. “In the course of building Vogtle, three of the biggest challenges for the AP1000 were solved: the U.S. industry now has a complete reactor design, has restarted the nuclear supply chain, and rebuilt a trained workforce. Vogtle and projects like it have positioned the U.S. to continue to manufacture and deploy advanced nuclear technologies and support American workers.”

Momentum Driven in Part by Data Center Demand

The DOE has underscored nuclear’s role in meeting future power needs in the U.S. “Analysts now project the addition of as much as 25 GE of new data center electricity demand will be added to the U.S. electric grid by 2030,” it said. “Siting new data centers near one of the nation’s 54 existing nuclear power plants is an ideal solution for meeting growing electricity demand because it reduces the need for billions of dollars in investments in grid upgrades. Recent research from DOE demonstrates that new reactors could and should be added to many of these sites, which have the existing infrastructure needed to support about 1GW of additional electricity load each, minimizing overall cost to the grid.”

Momentum for a nuclear revival driven by data center power demand is already beginning to crop up. As POWER reported earlier this month, Microsoft and Constellation Energy committed $1.6 billion to restart the Unit 1 reactor of the shuttered Three Mile Island in Pennsylvania by 2028. The facility, known as the Crane Clean Energy Center could supply Microsoft’s artificial intelligence (AI)-driven data centers for at least 20 years. Amazon Web Services, similarly, last year bought a 960-MW data center campus powered by the 2,500-MW Susquehanna nuclear plant.

However, Turk noted that the surge in electricity demand is not just from data centers and AI. Demand prospects are also growing given the”manufacturing Renaissance, including those 800 new and expanded manufacturing facilities on the clean energy side” as well as from electrification of vehicles and buildings, he said.

DOE Suggests More Restarts on the Horizon

On Monday, DOE officials hinted that additional nuclear restarts could be on the horizon. In response to a question about other potential projects, Jigar Shah, director of DOE’s Loan Programs Office (LPO), confirmed that the agency has received over $65 billion in nuclear-related loan requests across 13 states. While Shah did not provide specifics, he noted that both new nuclear plants and plant restarts are “being contemplated across this country.”

The $1.52 billion loan guarantee announced for the Palisades plant restart marks the first closing of a loan guarantee through the Energy Infrastructure Reinvestment(EIR) program under Title 17 Clean Energy Financing Section 1706, which Congress approved as part of the Inflation Reduction Act (IRA). As of Sept 30, 2024, $64.89 billion in Advanced Nuclear projects have submitted applications or are expected to submit applications in the next 120 days: $12.09 billion in Section 1703 projects and $52.8 billion in Section 1706 (EIR) projects, DOE officials noted. So far, LPO currently has “almost $300 billion in the pipeline for the loan program that’s not yet been made public,” Deputy Energy Secretary David Turk told reporters.

For Holtec, the prospect of reopening Palisades is part of a larger strategy to revitalize the site with small modular reactors (SMRs). In December 2023, it kicked off a program to build its first two SMR-300 reactor units at the plant, and it says it plans to file a Construction Permit Application (CPA) with the NRC for the units 2026, shortly after the existing Palisades plant returns to service(by the end of 2025). Holtec’s target commissioning date for the first SMR-300 plant is mid-2030, though that is subject to the NRC’s regulatory reviews and oversight.

“This loan is more than just a financial transaction: It is a signal of confidence in the vital role that nuclear energy will play in securing a clean, sustainable, and reliable energy future,” said Dr. Kris Singh, founder and CEO of Holtec International.

—Sonal Patel is a POWER senior editor ( @sonalcpatel, @POWERmagazine).