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Diablo Canyon to get up to $1.1B in US DOE nuclear credits; Palisades denied

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Diablo Canyon to get up to $1.1B in US DOE nuclear credits; Palisades denied

The Diablo Canyon nuclear plant in California will receive up to $1.1 billion in credits under a federal program designed to avoid the closure of financially vulnerable nuclear plants.

The conditional award is the first that the U.S. Energy Department has made as part of its $6 billion civil nuclear credit program created through the bipartisan infrastructure law of 2021. The Biden administration said the program is a crucial piece of its goal to achieve a carbon-free power sector by 2035.

"This is a critical step toward ensuring that our domestic nuclear fleet will continue providing reliable and affordable power to Americans as the nation's largest source of clean electricity," U.S. Energy Secretary Jennifer Granholm said in a Nov. 21 news release. "Nuclear energy will help us meet President Biden's climate goals, and with these historic investments in clean energy, we can protect these facilities and the communities they serve."

The DOE said final terms of the award are still "subject to negotiation and finalization" by the agency. The next round of the DOE's credit program will launch in January 2023.

Units 1 and 2 at the 2,240-MW Diablo Canyon plant were scheduled to be shut down in 2024 and 2025 as part of an agreement among owner PG&E Corp. subsidiary Pacific Gas and Electric Co. and environmental, labor and nuclear energy safety groups. But concerns over California's ability to meet its clean energy targets, as well as the formation of the DOE credit program, caused state officials and the utility to rethink that course.

In early September, California lawmakers approved a proposal from Gov. Gavin Newsom to authorize PG&E to seek an extension of operations at Diablo Canyon for up to five years. The agreement was contingent upon the plant receiving the DOE credits, which will roughly offset the $1.4 billion loan provided to Diablo Canyon through the state legislation.

After the state bill's enactment, Pacific Gas and Electric asked the U.S. Nuclear Regulatory Commission in late October to revive the plant's license renewal process.

No financing for Palisades plant

The DOE award to Diablo Canyon was made under the first round of the civil credit program, a tranche allocated for plants that had previously announced plans to close before the end of September 2026. As part of that round, Holtec International Inc. applied for credits for the 815.6-MW Palisades plant in Michigan, with the goal of restarting operations. The Palisades plant was shut down in May, and at that time, ownership was transferred from the operator, Entergy Corp., to Holtec for decommissioning.

But the DOE rejected Holtec's application. The agency did not immediately respond to questions Nov. 21 on its decision. In its guidance on the credit program, the DOE said it would not make public any information on unsuccessful applications.

"We fully understood that what we were attempting to do, re-starting a shuttered nuclear plant, would be both a challenge and a first for the nuclear industry," Holtec said in an emailed statement. "While the DOE's decision is not the outcome many had hoped for, we entered this process committed to working with our federal, state, and community partners to see if the plant could be repowered to return to service as a provider of safe, reliable, and carbon-free generation."

The company said it would remain focused "on the safe and timely decommissioning of Palisades to allow for potential reuse."

Holtec spokesperson Pat O'Brien was unsure if the company would pursue credits under future rounds of the DOE program. O'Brien also deferred to the DOE on its reasons for turning down the application.

The Palisades plant faced many challenges to reopening, including having already used the last of its available nuclear fuel and reassigned workers to other facilities. Holtec would also have to arrange for a new operator of the plant, as well as customers for its output.

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