Palisades nuclear plant gets $1.5B federal loan in bid to reopen, a national first

Covert Township — The federal government is loaning the owner of the shuttered Palisades Nuclear Plant $1.5 billion to help fund the company's bid to reopen the facility, an effort state and federal leaders said Wednesday will help meet climate goals and return hundreds of high-wage jobs to southwest Michigan.

Energy Secretary Jennifer Granholm announced the funding to a crowd of Palisades employees and supporters at a Wednesday morning event held in the plant's dry fuel storage building.

"It is an unspeakable joy to be here for so many reasons, both as the former governor of Michigan but as a champion for clean baseload power," Granholm said. "Everything about this operation is impressive, especially the focus on safety, the focus on professionalism, this community’s support for this effort."

Granholm and Gov. Gretchen Whitmer, a strong supporter of Holtec International's plan to restart Palisades, said the power generated at the plant will help the state and country meet climate goals. While not renewable power, nuclear energy plants don't emit greenhouse gases like fossil fuel plants do.

"By our estimates, to reach our net-zero goals by 2050 we need to triple, at least, our nuclear energy supply," Granholm said. "This is a big win for America, a big win for the nation."

At full capacity, Palisades is an 800-megawatt plant that could generate enough electricity to supply 800,000 homes. The plant started decommissioning about two years ago under its former owner, Entergy Nuclear.

If Palisades owner Holtec International is successful, the southwest Michigan nuclear plant would be the first in the country to return to the grid after decommissioning. Returning it to the grid is a significant undertaking, Whitmer said.

"We're here today to prove that it can be done, with the right partnership from the federal government, the local government, the state government, but also Holtec, who are experts in nuclear energy," Whitmer said. "There's no question that bringing this plant online not only can be done, but we'll show the world how to get it done."

Securing the federal loan is one of the major hurdles Holtec International has to clear before resuming operations at Palisades. It already has leapt over other obstacles, including finding a buyer for its power and securing funding from the State of Michigan.

Michigan lawmakers set aside $150 million for reopening the plant in the 2024 state budget, so long as the effort also gained some federal support.

There may be more federal support for Palisades in the future, Granholm said. She said the Biden administration is eyeing additional investments in nuclear power, including support for the development of small modular reactor technology and tax incentives for nuclear power generation.

"There may be other opportunities for us to co-invest, let's just say that," Granholm said.

Licensing, hiring next for Holtec

Holtec is a New Jersey company that was founded in 1986, developing products for the nuclear industry. It entered the decommissioning world in 2019 and has now set its sights on operating Palisades and building small modular reactors.

Before it can turn the plant back on, Holtec must receive an operating license and other approvals from the U.S. Nuclear Regulatory Commission, a process it hopes to complete by the end of 2025. The NRC established a board called the Palisades Nuclear Plant Restart Panel to coordinate the process. Holtec meets regularly with the panel to explain how it will safely bring the plant back online, meet regulatory requirements and make any necessary upgrades.

Physicist Edwin Lyman, director of nuclear power safety for the Union of Concerned Scientists, said the NRC should hold Palisades to the same standard it would hold a new nuclear plant. He raised concerns about the safety prospects of returning the plant to operation.

"Holtec has taken on an aging plant that hasn't aged particularly well, and it's been lying fallow now for a couple of years without the maintenance and regulatory controls that operating plants are under. So that regime is going to have to be restored in some way, and there will have to be verification that the NRC is going to be able to have assurance that that things haven't happened in the meantime that would further compromise the safety of trying to restart the plant," Lyman said.

"In addition, there's still the maintenance issues that would have had to be taken care of by Entergy if they had continued running the plant," he said, referring to the facility's former owner.

Palisades was shut down in May 2022. It stopped operating roughly a week early because of a problem with the control rod drive seal. Fuel was removed from the Palisades reactor on June 10, 2022, according to the NRC.

Holtec took over the plant in 2022 with the promise to decommission it. Its decommissioning plans raised red flags for Michigan Attorney General Dana Nessel's office, which voiced concerns in NRC filings over the company's proposal to finance the work using only a trust fund set aside by Consumers Energy customers when the plant was running.

Holtec has put money toward the effort to reopen Palisades, said Jeff Borah, senior manager of maintenance at Holtec Decommissioning International. He estimated the company has put as much as $500 million toward the effort to restart Palisades. The company will have to repay the Department of Energy loan if it fails to reopen Palisades.

Holtec spokesperson Nick Culp said the company cannot discuss the specific terms of the loan, but said the loan will be repaid with interest during the course of plant operations.

"Our long-term power purchase agreement with our not-for-profit rural energy cooperative partners, Wolverine Power and Hoosier Energy, ensures the plant's long-term economic viability and debt service," Culp said.

Before making the announcement, Granholm and Whitmer joined Holtec Palisades leadership in the plant's simulated control room. They practiced tripping the reactor, much like operators would practice in the 18 months of training required to get an operating license from the NRC.

Palisades now employs 300 people and is hiring more as it anticipates returning online, Holtec Palisades Training Manager Michael Bailey said. Several workers who left when Palisades started decommissioning are returning.

"A lot of people have been very excited about this opportunity," he said. "It's an historic opportunity."

Holtec executives said the plant will employ 550-600 people when it is operating.

U.S. Rep. Bill Huizenga, R-Zeeland, praised Wednesday's loan announcement as "a massive step towards restoring 800 megawatts of carbon-free energy generation and hundreds of highly skilled jobs" in southwest Michigan.

"Holtec's historic repowering of the Palisades Nuclear Power Plant will provide safe, reliable energy to meet southwest Michigan's growing needs, and it lays the groundwork for the first-of-their-kind small modular reactors to be placed at Palisades in the future," Huizenga said. "For these reasons, I’m proud to have led the bipartisan congressional effort on behalf of this project to lower energy costs, create jobs, and strengthen American energy security."

Protesters removed from announcement

A handful of protesters who live in the Palisades Park community just south of the plant, including Ann Scott and Bruce Davis, were removed from the event before the speeches began.

They later gathered outside the entrance to voice their concerns about the health impacts of living near the plant and the problems that have occurred there, including the leaking control rod seal that caused its former owner to decommission the plant early.  

They have little faith in Holtec, which has not operated a nuclear plant, let alone returned a decommissioning, 50-plus-year-old plant to operation.

"Imagine having a 1960s car that's been sitting in your barn for two years without gas, without oil, hasn't been started, the engine was broken before," said Bruce Davis, who lives near Palisades. "And you're going to re-start that plant?"

Charles Harttung, 62, of Berrien Springs has no qualms about living near Palisades, he said as he smoked a cigarette and waited for his lunch outside a restaurant north of the plant, The Lodge, on Wednesday.

Harttung has worked in the solar industry and knows that panels can't satisfy the region's energy needs alone since they don't function if they are covered with snow. The grid needs baseload power sources, he said, like nuclear.

"It's cleaner," he said. "It's more efficient than everything else we've got."

Because it can fill in when weather-dependent solar and wind energy aren't operating at full steam, nuclear power is seen by some as a key component of transitioning to a greener energy grid and meeting the benchmarks in Michigan's clean energy law, which requires utilities to produce carbon-free electricity by 2040.

The DOE said an operational Palisades would avoid 4.47 million tons of carbon dioxide emissions per year, which the department said was roughly equivalent to the annual emissions of removing more than 970,000 gas-powered cars from the road.

But nuclear power is expensive compared with other sources such as solar, wind and natural gas. That's part of the impetus behind the federal government's funding of nuclear efforts.

Palisades' license is set to expire in 2031, according to NRC records. Holtec plans to request a license renewal that will allow it to produce power at Palisades through 2051, the Department of Energy said in an Environmental Impact Statement released this month.

That plays into the return on investment the federal and state government can expect for their outlays to Holtec, Lyman said.

"We don’t know if Holtec is going to be able to secure that extended license renewal, and that means the plant could have to shut down again in just a few years," Lyman said. "That certainly raises questions about the capital investment in restarting at this point. Clearly, if they don't expect to be able to run it for another 20 years, it probably wouldn't make sense."

Holtec has said it wants to build two small modular reactor units at the Lake Michigan facility and intends to file a construction permit application in 2026, shortly after the Palisades plant is brought back online in late 2025. Holtec hopes to have the smaller reactor units up and running by mid-2030, pending the NRC's review.

There are no small modular reactors deployed in the U.S., although some projects are in development. Four SMR projects are under construction in other countries, the International Atomic Energy Agency said.

Lyman is skeptical about the company's plans, considering its dearth of experience in nuclear operations.

"They have no experience at any level in running nuclear power plants, yet they want to take this on soon and then possibly start building additional small modular reactors at the same site," he said. "...I'm really questioning whether they've demonstrated that they have the capability to do all this safety. That remains to be seen."

ckthompson@detroitnews.com