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DOE Offers Up to $1.52 Billion Conditional Commitment to Bring Mich. Nuclear Plant Back Online

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The U.S. Department of Energy through its Loan Programs Office on March 27 announced the offer of a conditional commitment of up to $1.52 billion for a loan guarantee to Holtec Palisades to finance the restoration and resumption of service of an 800-megawatt electric nuclear generating station in Covert Township, Michigan.

The project aims to bring back online the Palisades Nuclear Plant, which ceased operations in May 2022, and upgrade it to produce baseload power until at least 2051, subject to U.S. Nuclear Regulatory Commission licensing approvals.

Holtec Palisades has already lined up long-term power purchase agreements for the full power output with rural electric co-ops Wolverine Power Cooperative and Hoosier Energy.

Holtec Palisades is the first project to be offered a conditional commitment through the Energy Infrastructure Reinvestment program under Title 17 Clean Energy Financing Section 1706, first authorized and appropriated by President Biden's Inflation Reduction Act.

EIR can finance projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations or enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or greenhouse gas emissions.

“This project will repower existing energy infrastructure that has been nonoperational and support reinvestment in the community, underscoring the Biden-Harris Administration’s deep commitment to ensuring no community is left behind as we build America’s clean energy future,” DOE said.

In addition to the main 800-MW reactor, Holtec intends to use the Palisades site as the location for its first two small modular reactor units, which will not be part of the project that may be financed under this conditional commitment.

The two units will potentially add an additional 800 MW of generation capacity at the site, take advantage of existing infrastructure, and spur the domestic development of new reactor technologies, DOE noted. 

The project also supports President Biden’s Justice40 Initiative, which set the goal that 40% of overall benefits of certain federal investments flow to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution.

Accordign to DOE, the Palisades Nuclear Plant is located in a disadvantaged community, where residents face higher energy costs than 97% of communities in the United States.

“In addition, LPO works with all borrowers to create good-paying local jobs during construction, operations, and throughout the life of the loan and to adhere to a strong Community Benefits Plan that will provide information and opportunities for meaningful community input and engagement regarding the plant and its operations,” DOE said.

Holtec is committed to “remaining an actively engaged community partner to ensure the public and interested stakeholders are well informed of site activities and can seek information and provide feedback to the company, both directly to Holtec and through the relevant NRC restart process,” DOE said.  

Since the plant’s infrastructure already exists, the project does not involve traditional major construction activities, but it will require inspections, testing, refurbishment, rebuilding, and replacement of existing equipment.

Holtec is currently pursuing a reauthorization of the Palisades operating license with the NRC. To date, Holtec has submitted three NRC licensing requests in pursuit of license reauthorization and anticipates submitting the remainder in Spring 2024. 

While the conditional commitment demonstrates DOE’s intent to finance the project, the company must satisfy certain technical, legal, environmental, and financial conditions before DOE enters into definitive financing documents and funds the loan. 

 

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