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Multiple US nuclear plants could qualify for DOE credit program


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Multiple US nuclear plants could qualify for DOE credit program

Multiple nuclear power facilities could be eligible for the U.S. Department of Energy's new $6 billion program to preserve financially vulnerable nuclear plants in competitive markets, according to an analysis of S&P Global Market Intelligence data.

But the subsidy program is just one of many policy actions needed to preserve and expand the U.S. civilian nuclear fleet as the country works to decarbonize the power sector, industry experts said.

Applications for certification and sealed bids for the DOE program's first round of awards are due July 5. The first tranche of credits are reserved for plants that have announced plans to close before Sept. 30, 2026. Only two plants have closure dates in that time frame — Pacific Gas and Electric Co.'s 2,240-MW Diablo Canyon in California and Entergy Corp.'s 815-MW Palisades facility in Michigan. Diablo Canyon's status as a regulated plant might disqualify it from consideration, and Palisades is already on the cusp of closure.

DOE spokesperson Karla Olsen said the agency will publicly announce the names of reactors that are conditionally allocated credits, but the number and identities of other applications will be confidential.

Looking to next round

After a more targeted first round, the DOE will open up the program to a wider range of plants, including those that have not announced their intention to retire.

Thirty-nine nuclear plants are operating in organized wholesale markets, including utility-owned plants that might not qualify for the DOE credit program, according to data from S&P Global Market Intelligence. Of those plants, a combined 22 have announced closure dates or are at moderate to high risk of early retirement, and more than half of those are merchant plants, based on an analysis by S&P Global Platts Analytics.

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Many of the plants at the highest risk of premature closure already receive state subsidies. Those facilities include Constellation Energy Corp.'s 2,346-MW Byron, 1,805-MW Dresden and 1,819-MW Quad Cities plants in Illinois, and Public Service Enterprise Group Inc.'s 1,172-MW Hope Creek and 2,284-MW Salem facilities in New Jersey, the latter of which is co-owned with Constellation.

Energy Harbor Corp.'s 908-MW Davis-Besse and 1,268-MW Perry plants in Ohio had been receiving state subsidies that were set to run through 2027. The credits, however, were repealed in light of an alleged bribery scheme involving the plants' former owner, FirstEnergy Corp., to pass the nuclear subsidy law.

Although the DOE program does not exclude plants that receive state subsidies, applicants must show their reactor is projected to incur an average annual operating loss during the award period, potentially knocking out some plants receiving state credits.

But in terms of a plant's cost structure, "you never really know until the books are opened," American Nuclear Society CEO Craig Piercy said in an interview. "The goal here is trying to understand how, at a plant-specific level, who needs what."

In its guidance on the credit program, the DOE asked applicants to "clearly state the operational and market risks" for their reactors, in addition to expected costs and market revenues. The request echoed Energy Harbor's suggestion to consider more than just a plant's income when deciding whether to issue credits.

"The economic reality of nuclear generation is not sufficiently reflected by a generation unit's cash-flow-positive status alone," Energy Harbor said during the program's comment period. "Consideration of a reactor's financial outlook with the associated operational and market risks must be considered to understand the information that companies use for long-term economic decisions such as the permanent shutdown of a unit."

Among plants in competitive markets, Piercy said those with a single nuclear unit could be more in need of financial support than multiunit facilities. "The single-unit plants tend to be less competitive because their fixed costs for security are spread across fewer megawatts of output," Piercy said.

In addition to the Davis-Besse, Perry and Hope Creek facilities, plants with a single operating unit in competitive markets include Constellation's 1,078-MW Clinton Power Station in Illinois and the James A. FitzPatrick and R.E. Ginna/Ontario Sta. 13 plants in New York.

'Good first step'

Nuclear plant owners and industry groups broadly support the DOE program and see it as a sign that policymakers are prioritizing the preservation of carbon-free nuclear power.

"This civil credit program is a good first step toward supporting plants in markets that don't value [their] clean and reliable attributes," Piercy said.

But nuclear boosters say more must be done, including the adoption of a federal production tax credit for existing nuclear plants or a technology-neutral incentive for carbon-free power sources.

"Tax policy is really where you're going to have, I think, the most impact in the long term," Piercy said.

Ed McGinnis, a former acting assistant secretary for the DOE's Office of Nuclear Energy, said the civil credit program is "one important piece" of preserving existing plants but is "not sufficient" to meet U.S. climate and energy security goals.

"Perfectly good nuclear reactors are not able to sell us electricity in many respects, to no fault of their own, but because of the way the market is priced," McGinnis said in an interview. "At some point, I think those markets need to address structurally those issues to reflect the value of certain things that are really important to our market and our country, such as stable pricing."

McGinnis, who is now CEO of nuclear technology firm Curio Solutions, said maintaining existing nuclear capacity, deploying the next generation of reactors, and ensuring an adequate fuel supply chain and long-term waste storage solutions are crucial elements of a robust U.S. nuclear sector.

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