The hottest trend in nuclear power: Reopening shuttered plants

The U.S. has never restarted a decommissioned nuclear reactor, but today Holtec International closed a $1.5 billion loan from the U.S. Department of Energy’s Loan Programs Office to do just that: The money will help finance the reopening of the 805-megawatt Palisades Nuclear Generating Station in Covert Township, Michigan.

It’s the latest development in the effort to turn mothballed nuclear reactors back online in the U.S., where electricity demand is rising for the first time in decades. In late September, Microsoft announced a multibillion-dollar deal to turn back on Three Mile Island Unit 1 in Pennsylvania, as the tech giant seeks around-the-clock carbon-free power for its AI-fueled data center buildout.

The Palisades project is also the first to close a loan under the Energy Infrastructure Reinvestment (EIR) program of the Inflation Reduction Act, which finances projects that repower or retool idled energy infrastructure. As of today, the Loan Programs Office has $64.89 billion in applications for advanced nuclear projects under consideration or in process; most are seeking a form of EIR funding.

Located on Lake Michigan, the Palisades plant was shuttered by utility Entergy in May 2022 because of financial issues after 50 years of operation. It was the eighth-oldest nuclear plant in the nation at the time of its closing — Palisades produced its first electricity on New Year’s Eve in 1971.

In June 2022, Holtec became its new owner and removed the nuclear fuel with plans to complete the decommissioning process by 2041. But just weeks later, Holtec halted the process and applied for federal funding to turn the plant back on. The company is now aiming to restart the plant by the end of 2025 — also known as next year — with plans to provide baseload power until 2051.

Informed insiders suggest that it will take years to recommission the plant, something that has happened only a few times worldwide.

The funds from the new loan will be used to perform the inspections, testing, and restoration work necessary to restart the plant, while Holtec simultaneously pursues a reauthorization of the Palisades operating license with the Nuclear Regulatory Commission (NRC).

Calling it ​“a climate comeback story,” White House national climate adviser Ali Zaidi told reporters at a Friday press briefing that the Palisades restart is being done in partnership with union labor, ​“so we’re not just putting steel in the ground, but steel in the spine of the American middle class … And it’s translating into jobs and economic growth on the ground.”

Restarting Palisades is expected to create or keep up to 600 jobs, many of them union positions, in what is considered a disadvantaged community, where residents have higher energy burdens than those in 97 percent of communities in America, according to the DOE.

Along with the DOE funding, Palisades will also receive a boost from the U.S. Department of Agriculture’s Empowering Rural America program. Last month the Inflation Reduction Act program awarded two rural electric cooperatives in the region with over $1.3 billion in grants to purchase nuclear power from Palisades.

The USDA will provide more than $650 million to the Wolverine Power Cooperative to finance the purchase of approximately 435 megawatts of wholesale energy from the Palisades plant for its members across rural Michigan. And Hoosier Energy is being granted more than $675 million to help purchase approximately 370 megawatts of energy from the restarted Palisades plant, along with 250 megawatts of solar power for its members in Illinois and Indiana.

The USDA grants will create demand for the restarted reactor’s power — and defray the costs of nuclear power from Palisades by one-quarter for co-op members.

In addition to the Loan Programs Office funds and the USDA grant, if Holtec successfully repowers Palisades, it will be able to tap federal incentives such as a $15 per megawatt-hour production tax credit meant to keep the existing nuclear fleet competitive, as well as an investment tax credit intended to accelerate new plant construction. Michigan Gov. Gretchen Whitmer (D) backs the plan and directed $150 million to the reopening effort in the state’s budget.

Reviving other closed nuclear plants

Palisades is not the only U.S. nuclear plant that could be brought back from the dead.

Microsoft’s announcement earlier this month is another high-profile example. Three Mile Island’s Unit 1 was decommissioned in 2019 because of poor economics, but today’s need for clean, firm power might be enough to pull the reactor out of retirement. Microsoft has signed a $16 billion agreement to purchase energy from the reanimated plant over the course of 20 years in order to power its data centers in the PJM Interconnection.

Plant operator Constellation Energy plans to spend $1.6 billion to restart the 835-megawatt reactor, which is expected to employ about 600 people once back online. The nearby and more infamous Three Mile Island Unit 2, the site of a partial meltdown in 1979, is owned by EnergySolutions and is not being restarted.

Getting Unit 1 prepped in time for a proposed 2028 start date will require ​“significant investments” in the plant, including upgrading the turbine and generator and replacing the main power transformer and the cooling and control systems, as well as refueling costs, according to Constellation.

Meanwhile, in Iowa, NextEra Energy is considering reopening the Duane Arnold Energy Center, a 622-megawatt nuclear plant that closed in 2020, according to its CEO John Ketchum on a July earnings call. The 45-year-old plant was shuttered because of cost issues and storm damage.

No playbook for restarting a reactor 

Restarting any U.S. reactor will require approval from not only the NRC but state and local agencies as well.

But there’s no playbook for the NRC or a utility to follow on this task — it’s never been done before in the U.S. and hardly been done anywhere else, for that matter. Palisades would be just the second or third reactor to be restarted ever, according to Mycle Schneider, lead author of ​“The World Nuclear Industry Status Report,” in an interview last December with Bulletin of the Atomic Scientists.

Holtec or any plant owner will have its work cut out in demonstrating to the NRC how it will bring a retired site back to safe operation and upgrade plant equipment and processes to meet current NRC regulations.

Arnie Gundersen, chief engineer at Fairewinds Energy Education and an expert witness for an anti-nuclear coalition aiming to block Palisades’ restart, expressed concerns about the lack of active safety maintenance at the reactor since Entergy shut it down in May 2022. His criticism focused in particular on a massive reactor component: the steam generator, which plays an integral role in turning fission energy into heat, steam, and ultimately power. Its condition is crucial because it is responsible for isolating radioactive fluids from nonradioactive fluids.

In June 2013, two reactors at the San Onofre Nuclear Generating Station in Southern California were permanently shut down given the severe degradation of their steam generator tubes. 

Holtec has sent mixed messages about whether it will replace this expensive piece of equipment as part of the restart, according to the antinuclear groups. 

“Restarting the reactor without entirely replacing the steam generators is playing with fire,” warns Michael Keegan, co-chair of Don’t Waste Michigan, in an email.

Deferred maintenance impacting steam generator tubes is just one example of the challenges at hand. There are reactor-vessel embrittlement concerns, control-rod seal issues, and a long list of high-stakes reliability matters to be addressed.

The NRC has launched the Palisades Nuclear Plant Restart Panel to oversee the effort. The regulator has also been petitioned by opponents of the restart to adapt its ​“rulemaking to include a codified process for returning a decommissioning plant to operational status.”

In addition to the regulatory and technological unknowns of restarting a retired reactor, there are some operational risks specific to this vendor: Holtec​“is not a company that has any experience in operating, even less constructing, a nuclear power plant,” said Schneider in the December interview. Holtec’s core businesses are nuclear waste management and the decommissioning of reactors.

Still, these are hopeful days for America’s stagnant nuclear industry, which has been ground to a halt by consistent cost and timeline overruns over the last few decades.

More than 20 nations, including the U.S., pledged to triple installed nuclear power by 2050 during last year’s COP28 climate conference. The U.S. government and the DOE are committed supporters of commercial nuclear power, providing rich incentives to build advanced reactors, enrich uranium fuel, and keep the existing fleet in operation. Citizen sentiment for new nuclear power is more favorable than it has been in decades; social media is teeming with pro-nuclear content creators.

Despite this surge in support — and rising demand for new sources of firm, carbon-free electricity — the best the domestic nuclear industry can muster right now is not a cutting-edge new design or technological advancement. It’s a backward-looking effort to reanimate deteriorated old stock, abetted by billions in government subsidies.

We’ll soon find out if nuclear vendors will overpromise and underdeliver on this new approach too. The clock is ticking on Holtec’s pledge of getting Palisades restored and connected to the grid by the end of next year.