There are likely some celebrations taking place in Jupiter, FL, home of Holtec Intl, where the firm learned today (03/27/24) that the U.S. Department of Energy’s (DOE) Loan Programs Office (LPO) announced a conditional commitment of up to $1.52 billion for a loan guarantee to Holtec Palisades, LLC (Holtec Palisades) to finance the restoration and resumption of service of an 800-MW electric nuclear generating station in Covert Township, Michigan. If the loan is granted, and the project is completed, Holtec Palisades will be the first recommissioning and operation of a shut-down nuclear power plant in the United States.
Dr. Kris Singh, Holtec President and CEO, said in a press statement, “The repowering of Palisades will restore safe, around-the-clock generation to hundreds of thousands of households, businesses, and manufacturers. It also confers the environmental and public health benefits of emissions-free generation, hundreds of high-paying local jobs with a large union workforce, economic growth, and the social benefits of a strong community partner. We are also appreciative of the strong, unwavering support of Governor Whitmer, bipartisan support from the Michigan legislature and congressional delegation, and certainly from the local community, all of whom have championed this effort from the very beginning.”
A Complete Turn Around in Fortunes
The firm originally applied for $6 billion in funding in September 2022 only to see it hopes dashed by a rejection two months later, which in bureaucratic terms is DOE running at warp speed. The agency did not make a public statement explaining the reason for turning down the request. The loan application was supported by Michigan Governor Gretchen Whitmer who promised state funding if DOE came through on its end, and she delivered with the state legislature offering $150M if DOE approved the loan.
Today’s decision is a complete turn around for Holtec’s fortunes and the future of the reactor. The conditional commitment is subject to final approval, which depends on Holtec meeting loan closing conditions, e.g., a term sheet. In addition to federal loan funding, the repowering initiative has received financial support from the State of Michigan. Holtec said in a statement on its website that it is separately making a substantial capital investment in the restart program.
What is a ‘Conditional Commitment’?
A conditional commitment is an offer approved by the Secretary of Energy to issue a loan or a loan guarantee to a project on the terms and subject to conditions set forth in a term sheet negotiated between DOE and the applicant. The term sheet contains the key financial and commercial terms of the potential loan or loan guarantee, the conditions that must be satisfied prior to the issuance and funding of a loan or loan guarantee, and the ongoing rights and remedies of DOE under the financing documents.
Future Plans for SMRs
In addition to the main 800-MW reactor, Holtec intends to use the Palisades site as the location for its first two 300 MW small modular reactor(SMR) units, which will not be part of the project that may be financed under this conditional commitment. The two units will potentially add additional power generation capacity at the site, taking advantage of existing infrastructure.
NRC Has Licensing Issues
The loan, if granted, aims to bring back online the Palisades Nuclear Plant, which ceased operations in May 2022, and upgrade it to produce baseload clean power until at least 2051, subject to U.S. Nuclear Regulatory Commission (NRC) licensing approvals.The plant has a boatload of deferred maintenance and regulatory compliance issues to be completed to satisfy the NRC’s licensing requirements. Holtec will also need to contract for reliable fuel services to power the plant and to set up its outage schedule for refueling it.
While the NRC has hypothetically thought about relicensing a shuttered nuclear power plant, it has never actually considered a license application to do so. It is unclear what timeline the NRC could commit to as this is also the first time a nuclear plant owner has made such a request. To date, Holtec has submitted three NRC licensing requests in pursuit of license reauthorization and anticipates submitting the remainder in spring 2024.
This is not a new problem for the agency
In 2016 the NRC asked the industry for input on the agency’s development of a “draft regulatory basis” to support modifications to existing regulations affecting nuclear power plant shutdown and decommissioning activities.
Nuclear industry veteran Robert E. Sweeney, Head of Energy & Infrastructure. nXSolutions, in Washington, DC, wrote in his response at the time that the agency has an opportunity to think “out of the box” about the issue. Here’s the nut of what he wrote.
“The NRC should take a serious “out-of-the-box” review of its regulations and give due consideration to construct a regulatory framework that would allow licensees to temporarily reduce or suspend certain activities and place their plant in a protected shutdown or “laid up” state.”
“A new framework could establish and implement a new operating license “mode”. Such a mode would allow a safe “pause” in plant operations but not necessarily suggest or require a plant begin taking steps towards decommissioning or being placed in SAFSTOR.”
“Rather, this new mode would cover an extended or term-limited shutdown case within a particular set of requirements, including newly established standardized technical specifications with limits and conditions for the particular mode, as well as accompanying programmatic and maintenance requirements, commensurate with safety-risk in a “pause” mode condition (i.e. a Mode 6/7 depending on reactor type).”
“Adopting conforming requirements should be risk-informed and assure continued operations and maintenance of designated or essential systems at levels commensurate with the planned shutdown activities and term. Such a construct could afford plant owners with economic options and generating flexibility without baring prospects for a plant restart later when system demands and/or economics may be more favorable, allowing it to continue through some remaining portion of its licensed term.”
Economic Benefits of Reopening the Plant
The project is projected to support or retain up to 600 high-quality jobs in Michigan––many of them filled by workers who have been at the plant for more than 20 years––with approximately 45% of the workforce at the site being good-paying union labor upon restart. In addition to the workers supported by the facility’s restart, in its final form the loan guarantee would support more than 1,000 jobs during the facility’s regularly scheduled refueling and maintenance periods every 18 months.
The project is anticipated to avoid 4.47 million tonnes of CO2 emissions per year for a total of 111 million tonnes of CO2 emissions during the projected 25 years of operations—an amount roughly equivalent to the annual emissions of removing more than 970,000 gasoline-powered cars from the road.
Once operational, the Palisades Nuclear Plant will provide around-the-clock, zero-emissions electricity generation––a vital addition to Midcontinent Independent System Operator’s (MISO) resource mix as coal plants are retired. Holtec Palisades has already procured signed long-term Power Purchase Agreements (PPAs) for the full power output with rural electric co-ops Wolverine Power Cooperative and Hoosier Energy in Michigan, Illinois, and Indiana.
American Nuclear Society Praises DOE’s Action
In a press statement, Craig Piercy, CEO and Executive Director of ANS, said, ““Michiganders stand to benefit from cleaner air and a stronger, more resilient power grid from the planned restart of the Palisades nuclear power plant. Palisades would be the first decommissioning nuclear power plant in America to reopen.”
“Unfavorable market conditions caused Palisades’ premature closure in 2022; today’s push to reverse that business decision is being driven by climate and energy priorities. Restarting Palisades means the return of a reliable and dispatchable source of zero-carbon baseload electricity, capable of helping Michigan meet its clean energy needs year-round without interruption.”
Kenneth Petersen, 2023-24 President of ANS added, ““Michiganders have been struggling with the environmental consequences of the premature loss of carbon-free energy from Palisades. Repowering Palisades would restore Michigan’s air quality to pre-shutdown levels and help a backsliding Michigan achieve carbon neutrality for its electricity consumption by 2040.”
“The loss of 800 megawatts of 24/7 clean baseload power from Palisades led to an increase in natural gas-fired generation, which is both carbon-emitting and interruptible in its fuel supply. As forewarned by the combined Michigan and Ohio Section of ANS in a 2022 letter to Gov. Gretchen Whitmer, wind turbines and solar panels are too land-intensive, weather-dependent, and intermittent in their electricity production to fill the vacuum left by Palisades.”
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