Is investing a combined $1.8 billion in federal and state funds to restart the aged Palisades nuclear power plant on the Lake Michigan shore necessary to meet Michigan’s climate goals?
That’s what’s in the works, with the U.S. Department of Energy leading with a $1.5 billion dollar loan guarantee and Michigan budgeting $300 million to support the restart.
MLive reported that by 2012, the Nuclear Regulatory Commission had declared Palisades one of the four worst-performing plants in the country. Entergy Energy then owned the Plant.
The plant’s current owner, Holtec International, is better known for decommissioning nuclear plants. Can it successfully restart and operate Palisades? This is an endeavor that has never been attempted in the United States.
These are some of the questions Paris-based international nuclear policy analyst Mycle Schneider raised in a December 2023 interview with the Bulletin of the Atomic Scientists.
Schneider publishes the annual World Nuclear Industry Status Report and has advised four European governments and the European Union on nuclear power issues.
Poor economics
In the interview, Schneider said when a nuclear plant closes, it’s for a reason.
“It is not closed because (the utility) doesn’t like to do this anymore. In general, the most prominent reason (for closing reactors) over the past few years was poor economics.”
The Biden administration is on the cusp of approving a $1.5 billion loan to jump-start Palisades. Michigan has budgeted $150 million to date, with another $150 million proposed.
“Keeping Palisades open will keep energy costs low, shore up domestic energy production, and increase Michigan’s competitiveness for future economic development,” said Governor Gretchen Whitmer in September 2022, when this initiative was first announced.
Will it work?
These big subsidy programs are relatively new in the U.S., according to Schneider.
“Now these state support programs have been increased significantly and they are coupled with federal programs, because the reactors are not competitive,” he said.
Given that a restart of a nuclear power plant has no track record in the U.S., Schneider raised concerns.
In a series of email exchanges with Great Lakes Now, Schneider said construction on Palisades started in 1967, and it was connected to the grid in 1971. He said spending over a billion dollars in an attempt to “bring back to service life a machine of an entirely different technological era is a stunning idea.”
And Schneider challenged Holtec’s late 2025 restart date. “Given that Holtec — as far as I know — has never held a reactor operating license and that Palisades needs an entire new operating license, I would consider the 2025 target not feasible.”
Better use of funds
Schneider addressed the alternatives to a $1.8 billion government investment in restarting Palisades to meet climate goals by emphasizing the low cost of wind and solar.
“Most of Michigan is part of the Midcontinent Independent System Operator power market. ... MISO has some of the cheapest firming costs for some of the cheapest wind and solar electricity in the country,” according to the financial analysis company Lazard, said Schneider.
Firming costs are “investments into complementary generation or storage needed to make variable renewables as reliable as conventional sources of electricity for a power system,” Schneider told Great Lakes Now.
Schneider said he hasn’t seen a system cost comparison for Michigan’s “travel-to-the-1960s” initiative compared to other options like sufficiency, efficiency, demand-response, storage, and renewables.
“Would this not be the basis for decision-making involving hand-outs of $300 million in Michigan public funding and possibly $1.5 billion in DOE loan guarantees?” he said.
Schneider told Great Lakes Now that nuclear power production peaked in 2006, but wind and solar outputs have been increasing.
“While official numbers are not yet available, there is no doubt that in 2023, for the first time, wind and solar will have generated more electricity than nuclear,” said Schneider.
Gov. Whitmer’s office did not respond to a request for comment on the restart. Questions submitted by Great Lakes Now included whether the $300 million Michigan is investing would be better spent on renewable energy and if there was concern about additional nuclear waste storage on the Lake Michigan shore.
Rigorous approval process
Holtec spokesperson Nick Culp told Great Lakes Now the company has been engaged in a process with the Department of Energy in hopes of a timely approval of the federal loan.
Culp said the target restart date is toward the end of 2025, and Holtec has been impressed with the department’s loan application process.
“That process included rigorous financial, technical, legal, and market analysis by the Department of Energy’s professional staff, which includes qualified engineers, financial, and legal experts, as well as expert third-party advisors,” according to Culp.
Culp said the Palisades plant has received high safety ratings from the Nuclear Regulatory Commission and has been recognized as a top-performing plant.
“That is both a testament to the excellent material condition of the plant as well as to the operating experience and qualifications of our plant workforce who are on site and returning,” said Culp.
Asked about a potential risk to taxpayers in the event of a financial default on the loan, Culp declined to comment, referring Great Lakes Now to the DOE’s loan program site.
Mixed reaction from environmental groups
The Michigan Sierra Club has been vocal in its criticism of the Palisades facility.
Writing on their website in February, they said: “Since its opening on New Year’s Eve in 1971, serious problems have plagued the plant. Just 13 months after opening, Palisades experienced its first radioactive leak, prompting authorities to shut it down.”
The Sierra Club went on to write about how “we don’t need to waste money on a nuclear power plant that is more expensive, dangerous, and unnecessary for the state.” The group called on Michigan to invest in solar, wind energy and energy efficiency.
Great Lakes Now asked environmental groups in Michigan and Chicago to comment on the restart of Palisades and received a mixed reaction.
From Traverse City, Great Lakes policy expert Dave Dempsey said he is skeptical of the restart of Palisades since “it has a troubled track record.”
Dempsey is a senior adviser to For Love of Water (FLOW) and previously worked at the International Joint Commission, the U.S. and Canadian agency that advises the two countries on Great Lakes issues.
Dempsey noted the “enormous” amount of water the plant draws and that radioactive waste remains an unresolved problem, “so this restart will generate more hazards for the Great Lakes.”
The $300 million Michigan is providing for Palisades would be better used to meet the state’s wind and solar goals, he said, echoing Schneider.
“We do not support the restart. If nuclear energy is to play a role in our future climate action plans, much more needs to be done to protect the public and environment from its hazards,” Dempsey said.
Chicago-based Alliance for the Great Lakes did not take a direct stand on the Palisades restart, but chief operating officer Molly Flanagan expressed concern about nuclear waste storage.
“The Great Lakes shoreline is already being used for nuclear waste storage from numerous shuttered plants and a lack of anywhere to send the waste from decades past. The last thing we need is to generate more nuclear waste with nowhere to go next to the drinking water source for more than 40 million people,” said Flanagan in an email.
Two prominent environmental groups — Chicago’s Environmental Law & Policy Center and the Michigan Environmental Council — declined to take a position on the Palisades restart.
The Michigan League of Conservation Voters in Ann Arbor did not respond to email and phone messages requesting a comment on Palisades.
In December 2023, a bi-partisan group of Michigan members of Congress led by Republican Bill Huizenga wrote to the Department of Energy proclaiming that the (Palisades) plant “remains in workable condition” and called for the agency’s “prompt attention” to the restart.
In response, Nuclear Regulatory Commission Chair Chris Hanson wrote, “While this is a first-of-a-kind review, the NRC understands Holtec’s current timeline to restart the plant and will perform its licensing and oversight duties in a timely manner.”
