Owner of Palisades to Reapply for Funding to Reopen Nuclear Power Plant

Owner of Palisades to Reapply for Funding to Reopen Nuclear Power Plant

Nuclear power plant

Riley Beggin | Hannah Mackay | The Detroit News 
December 19, 2022 

Updated December 20, 2022

Holtec International, the owner of the Palisades nuclear plant near South Haven, will reapply for federal funding in an attempt to revive the shuttered plant.

The company applied for funds through the U.S. Energy Department’s Civil Nuclear Credit Program after the plant was officially shut down in May. It announced in November it had been denied.

The $6 billion program funded by the Bipartisan Infrastructure Law aims to keep existing reactors around the country running. Applicants must demonstrate that they will be closed for economic reasons and that carbon emissions and air pollutants will rise if they are closed.

“The repowering of Palisades is of vital importance to Michigan’s clean energy future,” said Patrick O’Brien, Holtec’s director of government affairs and communications. “As Michigan transitions from fossil-fuel generation to renewables and emerging advanced technologies, baseload nuclear generation is an essential backstop.”

Holtec acquired the plant from Entergy Nuclear last December and planned to decommission it.

The plan received scrutiny from Attorney General Dana Nessel and several environmental groups, which questioned whether the company had the finances to quickly and safely decommission the plant. The environmental groups also raised concerns it could threaten the Great Lakes if the company decided to ship nuclear waste to a storage facility out of state.

In September, Holtec announced it would seek federal grant funding to reopen the plant — a plan supported by Gov. Gretchen Whitmer and clean energy groups that say nuclear power is critical to developing a carbon-neutral economy.

“The Palisades plant is a critical energy source and economic driver for the southwest Michigan region. That’s why we’ve been supportive of Holtec’s efforts to reopen a non-operational nuclear plant for the first time in American history, protecting 600 high-paying jobs and hundreds of millions of dollars in annual regional economic development,” Whitmer spokesman Bobby Leddy said in a statement.

“We are in communication with Holtec and ready to support their efforts to seek federal funding to move the ball forward. In the meantime, the state continues to have enough energy to meet the needs of families, communities, and small businesses.”

While there are environmental issues related to mining and processing uranium fuel and the potential for radioactive releases should disaster strike, nuclear plants can produce lots of electricity without emitting greenhouse gases. 

O’Brien said the company received “supportive feedback” from the Department of Energy despite losing out on the last round of funding.

“This decision to reapply is one that we did not take lightly, but the support of the State of Michigan, local officials and key stakeholders — who recognize the significant benefit in providing a safe, reliable, carbon-free power source, as well as providing a significant economic impact through good paying jobs and the use of many local goods and services — leads us to believe this is the best path forward for the facility and our state,” he said.

In the meantime, Holtec will continue decommissioning the plant, O’Brien added, with a focus on “managing the spent fuel removal from the spent fuel pool to dry cask storage.”

Applications for the next round of funding begin in January 2023, according to the Department of Energy. The bipartisan infrastructure law appropriated $1.2 billion each fiscal year 2022-26 for the program.

There would be hurdles to reopening. Palisades shut down more than a week early in May as “a conservative decision based on equipment performance,” U.S. Nuclear Regulatory Commission Public Affairs Officer Prema Chandrathil said at the time. The control rod drive mechanism had a degrading seal.

The Nuclear Regulatory Commission transferred Palisades’ license from Entergy to Holtec “for the purpose of decommissioning Palisades” on June 28, the NRC said. All fuel was removed from the reactor on June 13.

Holtec then applied in July for funding under the federal Civil Nuclear Credit Program. To qualify for credits, there must be “reasonable assurance” the reactor can be operated with its current license and pose no significant safety hazards.

Holtec says it plans to decommission the plant within 19 years of its May 2022 shutdown. The federal government allows up to 60 years for similar projects.

After fuel is removed from the reactor, it goes to a spent fuel pool to cool, according to Holtec. Then it is put into stainless steel canisters and transferred to a storage facility. The company will then dismantle the radioactive equipment and contaminated components are sent to an off-site facility. The state and federal government will inspect the site before finalizing the decommission and will continue to monitor the site afterward.

Palisades is one of three nuclear plants in Michigan, including the Fermi 2 Power Plant near Monroe and the Cook Nuclear Plant near St. Joseph.

Consumers Energy built Palisades in the 1960s. It sold the plant to Entergy in 2007 for $380 million and agreed to continue purchasing electricity generated by the plant through this spring. 

Nuclear has since become more expensive than other sources of power, Brandon Hofmeister, Consumers Energy vice president of governmental, regulatory and public affairs, told The Detroit News earlier this year. At times, electricity from Palisades cost roughly 57% more per megawatt hour than the market price.

Palisades can provide 800 megawatts of power — about 10% of the Consumers’ peak demand, Hofmeister said.

The state’s three nuclear plants generated around 30% of the state’s electricity in 2021, according to the U.S. Energy Information Administration, the second-highest of any energy source. Coal provided the largest share with 32%.