Fresh off Palisades closure, Michigan will study state’s nuclear prospects

• Michigan will study whether the state could tap into new nuclear technologies 
• The study comes amid a scramble to revive the shuttered Palisades plant
• The feds could decide whether to bail out Palisades soon as next month

As Michigan awaits word on whether the federal government will help save the Palisades nuclear power plant, the state will consider: Could new nuclear reactors be part of Michigan’s energy future?

After clearing the Senate Wednesday, a bill directing the state to study that question is headed to Gov. Gretchen Whitmer’s desk, funded by $250,000 earmarked in the June budget deal. 

Related stories:

• Gretchen Whitmer: Federal grant could keep open Palisades nuclear plant
• Nuclear power is having a moment in Michigan after Palisades
• Owner says Palisades nuclear plant closed for good. Michigan has other ideas

Rep. Graham Filler, the St. Johns Republican who sponsored the bill, said he hopes it prepares Michigan to take advantage of new technologies that could lower costs and increase safety of a carbon-free energy source. Nuclear power delivers a fifth of the nation’s energy, but struggles to compete against cheaper gas, wind and solar.

“Nuclear energy takes investment,” Filler said. “But the actual results are better than anything else in the energy field when it comes to clean, consistent generation of energy.”

The study, to be conducted by a yet-to-be-picked outside firm, will consider nuclear’s financial and environmental tradeoffs, and how Michigan could build an industry around emerging technologies such as small modular reactors that promise to deliver safer, cheaper power than traditional nuclear plants. It will also analyze policies to bring down the high costs that have hobbled the nuclear industry.

But the effort faces criticism from some environmental groups, who cite safety and cost concerns as evidence that nuclear energy doesn’t make sense for Michigan.

“Wind and solar just keep winning and getting cheaper,” said Mike Berkowitz, who leads the Sierra Club’s Beyond Coal campaign in Michigan. “So we don't need false solutions like the Palisades nuclear plant, or small modular reactors that don't even exist yet.”

The study comes as Michigan continues its push to reopen the Palisades plant along the Lake Michigan shoreline in southwest Michigan’s Van Buren County. The 51-year-old plant closed in May, after its long-term power contract with Consumers Energy expired. 

Plant operators had been planning the closure for years when the Biden administration launched the Civil Nuclear Credit Program, a $6 billion fund to bail out financially struggling nuclear plants.

That triggered a campaign to save Palisades, which culminated in an announcement this month that the plant’s new owners, Holtec International, are seeking a federal grant to reopen the plant.

Holtec spokesperson Patrick O’Brien said the plant’s reopening would be “a major success story for the state and nation” that would help Michigan decarbonize its energy sector and bolster the region’s energy security. But O’Brien cautioned that the company is still evaluating whether it’s possible. 

The plant’s fate has become a wedge issue for environmental groups. Some warn that losing Palisade’ carbon-free power would force utilities to burn more fossil fuels, worsening the climate crisis. Others cite safety concerns at the aging plant and nuclear’s continued financial struggles as reasons to keep Palisades closed.

“Subsidizing the environmental and financial disaster of nuclear plants just makes no sense,” said Berkowitz, of the Sierra Club.

Last week, the group was among dozens to urge Energy Secretary Jennifer Granholm to deny Holtec’s grant request, arguing the credit program was meant to support still-operating plants in need of a bailout, rather than already-shuttered plants like Palisades.

The Department of Energy declined to provide Bridge with specifics regarding Holtec’s application for federal funds. Agency spokesperson Ramzey Smith said the agency could announce awards through the program as soon as early October.

For now, Holtec’s O’Brien said, Palisades’ 225 remaining workers are focused on decommissioning the plant. But “nothing has been undertaken that can’t be reversed should the path change,” he said.

In addition to securing the federal grant, O’Brien said Holtec would also need money from Michigan taxpayers, though how much isn’t clear. Palisades also would need maintenance and upgrades, and Holtec would need to hire 400 workers and find another company to operate the plant.

And importantly, Holtec would need a buyer for Palisades’ power. 

Before the plant closed, its long-term contract with Consumers at times left the utility paying 57 percent more than the going rate for electricity. Consumers spokesperson Josh Paciorek said the utility would only be interested in buying power from Palisades if Holtec could offer it at a competitive price.

“Our commitment is to delivering energy to our customers that is affordable and reliable, and we’re able to do that today without power from Palisades,” Paciorek said. 

But Katherine Peretick, a member of the Michigan Public Service Commission, which regulates Michigan energy utilities, noted that the Inflation Reduction Act created new federal tax credits that will help lower nuclear’s market cost. 

“It’s going to have a pretty big impact on the economics of nuclear generation,” Peretick said.

Filler, the legislature’s most vocal nuclear champion, said he expects further conversations about how the state could subsidize nuclear power to bring costs down. 

Spokespeople for Gov. Gretchen Whitmer did not respond to Bridge Michigan’s questions for this story, but a statement from her office earlier this month said Michigan is “ready” to identify state funding for Palisades.

While Holtec awaits word on the hoped-for bailout money, the federal Nuclear Regulatory Commission is proceeding with its oversight of Palisades’ decommissioning process. Prema Chandrathil, a regional spokesperson for the commission, said it has never before encountered an attempt to reopen a defueled nuclear reactor. 

If Holtec makes such an ask, Chandrathil said, “the agency will determine the appropriate path, based on whatever facts and rationale are provided, to ensure the highest standards of safety.”