Closed Michigan power plant paves the way for further nuclear energy development

The Palisades Nuclear Power Plant on the shores of Lake Michigan has become a part of history, a relic from a time when nuclear energy was thought to be the future.

The reactor in Covert, Michigan, about 70 miles southwest of Grand Rapids, shut down in May 2022 after more than four decades of providing power to the industrial Midwestern state.

The closures were part of a decade-long wave of nuclear reactor closures in the United States as nuclear power struggles to compete with cheap, plentiful natural gas in the wake of the shale boom and the rapid expansion of renewable energy.

Additionally, this energy source has long been controversial, with opponents concerned about the impact of waste generated by the process and the possibility of radiation leaks in the event of an accident.

But now Palisades is poised to become the first nuclear reactor in U.S. history to be shut down and reopened after a shutdown. Lawmakers on both sides of the political aisle, tech companies and big utilities are increasingly seeing nuclear power as a reliable, carbon-free source of energy to meet the nation’s growing electricity demand while cutting emissions to combat climate change.

Palisades’ private owner, Holtec International, aims to get the plant up and running by the end of 2025, with help from a loan of up to $1.5 billion from the Department of Energy and a $300 million grant from the state of Michigan.

The Palisades restart plan is under review by the Nuclear Regulatory Commission. If successful, Palisades could provide a roadmap for restarting other mothballed nuclear plants, such as Three Mile Island in Pennsylvania.

“This is a bridge to our small modular reactor program,” Holtec President Kelly Trice said, in support of long-term plans for small modular reactors to nearly double the facility’s power generation by 2030. The new technology, which could be a first for the U.S. power grid, is expected to accelerate the deployment of nuclear power plants in the future.

“Our goal is to have more nuclear power plants with small modular reactors across the country and the world,” he said.

Florida-based Holtec purchased Palisades with the intent to demolish it in 2022. The previous owner EntergyThe company closed the facility due to its financial situation being strained by competition from cheaper natural gas.

But Michigan Governor Gretchen Whitmer has made restarting the Palisades plant a priority, saying it could help the state’s effort to produce all of its energy from clean sources by 2040. Whitmer signed a bipartisan bill providing state funding and helped Holtec apply for federal funding.

“The shutdown wasn’t so long that it was irreversible,” Trice said. “The plant was actually not scheduled to do any major decommissioning work for 10 years.”

The Palisades Nuclear Power Plant’s reopening could be a turning point for the nuclear industry after a decade in which the nation’s 12 reactors have been shuttered. The 800-megawatt reactor would provide enough electricity to power more than 800,000 homes.

The United States is facing one of the largest increases in electricity demand in history, driven by data centers powering artificial intelligence, a resurgence in domestic manufacturing, and the electrification of vehicles and the economy as a whole. According to a new report from Rystad Energy, data centers and electric vehicles alone are expected to add 290 terawatt-hours of demand by 2030, equivalent to the electricity consumption of Turkey.

Nuclear power is the most reliable source of energy, producing maximum electricity 93% of the time without producing carbon dioxide emissions. According to the U.S. Energy Information Administration, nuclear power is nearly four times more reliable than solar and three times more reliable than wind power.

Executives at major power companies have warned that not meeting that demand could jeopardize U.S. economic growth. Southern Company Chief Executive Officer Chris Womack said in June that the U.S. will need to build a significant number of new nuclear plants to meet growing electricity demand, and the U.S. and a coalition of more than 20 countries pledged in December to triple nuclear energy by 2050.

But building a new nuclear plant is time-consuming and expensive, and plants can get embroiled in legal trouble. Southern Nuclear Power recently completed the first new plant in decades, but the project is years behind schedule and billions of dollars over budget.

Trice said restarting the reactors could be “easier, cheaper and quicker” than building new ones, but stressed that this depended on how far decommissioning work had progressed.

“Other plants are in discussions with us about how to do that,” the executive said, “and we’re hopeful that they will. So from that standpoint, it could be a model for some plants where that applies.”

Holtec wants to expand the Palisades Nuclear Power Plant with two 300-megawatt small modular reactors (SMRs), nearly doubling the plant’s generating capacity to 1,400 megawatts, enough electricity to power 1.4 million homes.

Trice said the company aims to break ground by the end of 2027. He expects the SMR to be operational in 2030.

“Our goal is to be on the grid first,” Trice said.

SMRs are seen as an important lever for expanding nuclear power because they promise to reduce capital costs, a major obstacle to building new nuclear power plants. Like conventional nuclear plants, SMRs use pressurized water reactors, but their components are prefabricated and assembled at the construction site.

“By comparison, this plant is small and simple. It’s easy to operate,” Trice said.

Once the first SMR is complete, Holtec plans to create purchase orders “to continue to manufacture the parts of the plant that are needed,” he said. “We have countless utilities contacting us and saying they want to be on the list,” Trice said.

Big tech companies are also increasingly looking to nuclear power, including Holtec’s SMR plans. The tech giants are building power-hungry data centers to support AI, but they still want to meet climate goals.

“We’ve talked to just about every utility, especially the big utilities, who have talked to us,” Trice said. “They’re all interested in carbon-free, green, baseload power.”

Constellation EnergyThe company, the largest U.S. nuclear power plant operator, has suggested Palisades could be a model for restarting the Three Mile Island nuclear plant near Middletown, Pennsylvania. It owns the site’s Unit 1, which was shut down in 2019. (Unit 1 is not the reactor that partially melted down in 1979 in the worst nuclear disaster in U.S. history.)

“Obviously what happened with Palisades was fantastic,” Constellation CEO Jose Dominguez said during the company’s first-quarter earnings call in May.

Constellation is considering “a variety of possibilities” and Three Mile Island “will probably be one of the options we consider,” Dominguez said.

“We’ve gotten to the point where we believe it’s technically feasible,” Constellation chief strategy officer Kathleen Baron told CNBC about restarting Three Mile Island, “but there are a number of economic, commercial and regulatory issues that are still being worked out.”

NextEra EnergyThe company, the largest renewable energy operator in the United States, is considering whether to reopen its Duane Arnold Energy Center in Paro, Iowa, which ceased operations in August 2020.

“If we could do something with Duane Arnold, it would create opportunity and drive demand in the market,” NextEra CEO John Ketchum said during the company’s second-quarter earnings call on July 24.

“We’re looking at it,” Ketchum said, “but we would only do it if we had sufficient mitigation in terms of that approach and could do it in a way that is essentially risk-free. There are some things that have to be worked out.”

But three plants — Palisades, Three Mile Island and Duane Arnold — were shut down relatively recently, and Doug True, chief nuclear officer at the Nuclear Energy Institute, said finding more plants to restart could be a challenge.

“The situation is becoming increasingly challenging,” True said, “as many of these nuclear plants have already begun dismantling and decommissioning the facilities, which were not thoroughly preserved with any intention of being restarted in any way.”

As for the Three Mile Island and Duane Arnold nuclear plants, “a lot of thought and effort will be needed to determine what it takes to get them up and running again,” True said.