Loan guarantee for Palisades restart

28 March 2024

The US Department of Energy Loan Programs Office has conditionally committed up to USD1.52 billion for a loan guarantee to Holtec Palisades for its project to bring the Palisades plant, which ceased operations in May 2022, back online. If the project proceeds, it will be the first nuclear power plant in the USA to return to commercial operations after being closed down.

Palisades (Image: Holtec)

Holtec agreed to purchase the 800 MWe pressurised water reactor from then-owner and operator Entergy in 2018, ahead of the scheduled closure, for decommissioning. The acquisition was completed in June 2022, within weeks of the reactor's closure, and at that time Holtec planned to complete the dismantling, decontamination, and remediation of the plant by 2041. But the company then announced plans to apply for federal funding to enable it to reopen the plant, with Michigan Governor Gretchen Whitmer amongst those pledging support for the move. The State of Michigan's Fiscal Year 2024 budget, signed by Whitmer in mid-2023, provides USD150 million in funding towards the plant's restart.

Responding to the loan guarantee announcement, Whitmer said reopening Palisades would protect 600 "good-paying, high-skill jobs" as well as "clean, reliable power" for 800,000 homes. "Once open, Palisades will be the first successfully restarted nuclear power plant in American history, driving USD363 million of regional economic impact and helping Michigan lead the future of clean energy," she said.

In October 2023, Holtec formally began the process of seeking reauthorisation from the US Nuclear Regulatory Commission (NRC) to restart Palisades, having already signed a long-term power purchase agreement with the non-profit Wolverine Power Cooperative for the sale of the output from the restarted plant.

Subject to NRC approvals, the project aims to bring the plant back online and upgrade it to produce baseload clean power until at least 2051, the Department of Energy (DOE) said. Restarting the plant will avoid some 4.47 million tonnes of CO2 emissions per year, for a total of 111 million tonnes over the next 25 years.

"Nuclear power is our single largest source of carbon-free electricity, directly supporting 100,000 jobs across the country and hundreds of thousands more indirectly," said US Secretary of Energy Jennifer Granholm. "President Biden's Investing in America agenda is supporting and expanding this vibrant clean energy workforce here in Michigan with significant funding for the Holtec Palisades nuclear power plant."

Holtec Palisades is the first project to be offered a conditional commitment through the Energy Infrastructure Reinvestment (EIR) programme under the US Inflation Reduction Act, a wide-ranging bill including clean energy, climate mitigation and resilience, agriculture, and conservation-related investment programmes which was signed into law in August 2022. The EIR programme can finance projects to repower existing energy infrastructure that has been non-operational, or enable operating infrastructure, to combat greenhouse gas emissions.

Holtec has also said it intends to locate its first two small modular reactor units at Palisades. Although this will not be financed under the conditional commitment, the DOE said the SMR units "would potentially add an additional 800 MW of capacity at the site, take advantage of existing infrastructure, and spur the domestic development of new reactor technologies, which is critical to combatting the climate crisis".

Resuming operations

Palisades began commercial operation in 1971. The plant had a "distinguished record of safe and reliable operation", according to Holtec, with Entergy's decision to close it driven by economic, rather than operational, considerations and coincided with the expiration of a 15-year power purchase agreement with Consumers Energy.

The unit was defuelled following its shutdown, but since the plant's infrastructure already exists, the project to restart it does not involve traditional major construction activities, DOE said. It will, however, require inspections, testing, refurbishment, rebuilding, and replacement of existing equipment.

Holtec will be required to satisfy certain technical, legal, environmental, and financial conditions before the DOE enters into definitive financing documents and funds the loan.

Researched and written by World Nuclear News