U.S. Energy Department Finalizes $2.8 Billion Loan Guarantee to Restart 800-Megawatt Palisades Nuclear Power Plant

The U.S. Energy Department has announced the closing of up to $1.52 billion in a loan guarantee to Holtec Palisades LLC to recommission the 800-megawatt (MW) Palisades Nuclear Plant in Michigan. Further, the U.S. Agriculture Department has awarded more than $1.3 billion in grants to two rural electric cooperatives to lower the cost of electricity passed on to their members for power from Palisades and other clean energy sources.

The loan guarantee will support efforts to restart the Palisades plant, which ceased operations in 2022, and upgrade it to generate baseload power until 2051, subject to licensing approvals from the Nuclear Regulatory Commission. Holtec Palisades has long-term power purchase agreements for the plant’s power output with rural electric co-ops Wolverine Power Cooperative and Hoosier Energy in Michigan, Illinois, and Indiana. This project is the first to be offered a conditional commitment through the Energy Infrastructure Reinvestment program under Title 17 Clean Energy Financing Section 1706, authorized by the 2022 Inflation Reduction Act.  This section of the act allows the program to fund projects that repower existing energy infrastructure that has been nonoperational, which applies to the recommissioning of the nuclear plant. The Palisades plant, expected to resume operations in 2025, was previously operated by Entergy Nuclear, which ceased operations in May 2022, before being acquired by Holtec International.

The Agriculture Department’s grants, awarded through its Empowering Rural America to Wolverine Power Cooperative and Hoosier Energy will lower electricity costs for the cooperative members. Hoosier Energy, which secured $675 million, will result in approximately $35 million in cost savings for Hoosier Energy members for purchasing about 370 MW from the nuclear plant. Wolverine Power secured more than $650 million to purchase around 435 MW of clean energy from Holtec Palisades.

The recommissioning of the power plant achieves multiple objectives in the Biden-Harris administration’s Investing in America agenda. Firstly, it creates jobs in an area that has historically struggled with unemployment. The restart of the Palisades nuclear plant is expected to create 600 jobs in Michigan, much of this being workers who had been working at the plant for years before the decommissioning. Additionally, the project would also support over 1,000 jobs during the plant’s regularly scheduled refueling and maintenance periods. Holtec Palisades also has the support of 15 trade unions.

Another main objective of the plant is to provide clean energy that is also reliable and affordable to rural Midwestern communities. The Holtec Palisades would also significantly help the region achieve climate goals and greenhouse gas emissions targets. The plant has the potential to avoid 4.47 million metric tons of greenhouse gas emissions annually. Over the span of its proposed 25-year lifespan, the nuclear plant could avoid a total of 111 million metric tons of emissions.

The Biden administration has taken several steps to support nuclear power including a recent announcement of $2.7 billion towards building a robust domestic nuclear fuel supply chain. Last month, Constellation Energy entered into an agreement with Microsoft to provide electricity to Microsoft data centers in the mid-Atlantic region. The nuclear energy will come from the restart of the Unit 1 reactor at the Three Mile Island plant in Pennsylvania that was retired in 2019.