Saving Palisades Nuclear Power Plant To Secure Michigan’s Clean Energy Future
Shutting down the clean energy source will be the equivalent of tearing down almost every wind turbine in the State.
After 50 years of safe, clean operation, the Palisades Nuclear Power Plant is slated to close in May. Entergy, the plant’s operator, had announced its plans to close the facility in September 2017, after significant capital investments were made in aging management programs and analyses to extend the life of the plant. The planned closure of Palisades, located in Covert, Michigan, is bad news for workers and for Michigan’s clean energy efforts. The plant is licensed to operate until 2031 and employs 600 regular workers – a figure that surges to 1,000 during refueling operations. Entergy similarly chose to prematurely close Pilgrim, Indian Point, and FitzPatrick after investing significant capital in their continued operation.
In 2007, after more than 30 years of operation and securing a renewed operating license from the US Nuclear Regulatory Commission (NRC), Michigan utility Consumers Energy sold the plant to Entergy for a mere $380 million and contracted to purchase power from the now Entergy-owned Palisades plant. Just five years later, Entergy and Consumers agreed to a deal in which ratepayers would buy out the future value of the power purchase contract for $172 million – with no future delivery of power. The Michigan Public Service Commission (MPSC) ultimately halted the proposed buyout, allowing Consumers to recover $136.6 million from ratepayers instead.
In 2020 the 812 megawatt (MW) power plant generated roughly 6 terawatt-hours (TWh) of clean electricity, or 5.6% of Michigan’s total electricity generation. More to the point, that output represented 15% of all clean power generated in Michigan — equivalent to 39 times the state’s solar generation and three-and-a-half times its hydro generation. Shutting down Palisades will be the equivalent of tearing down almost every wind turbine in the state.
Entergy’s 2018 decision to close and sell the plant to Holtec for decommissioning was explained as a business decision, not a concern over the safety of the plant. In a 2017 paper, authors Roth and Jaramillo revealed the Palisades plant was, on average, short $32/MWh relative to natural gas. Using 2020 generation data, the annual cost to cover Palisades’ cost difference is between $162 million and $222 million, with an average of $192 million per year.
At the same time, Consumers Energy hopes to cut 80 percent of its carbon emissions from a 2005 baseline by 2040. The state of Michigan also recently pledged to go carbon neutral by 2050. Along with the planned closure of Palisades, the utility’s 2018 integrated resource plan (IRP) proposed to shutter one natural gas and two large coal power plants in the next two decades. It is worth noting that Consumers Energy plans to keep open the 272 MW gas and fuel oil-fired Karn power plant (units three and four) through the units’ designed lifetimes of 2031. This, instead of keeping Palisades online through its operating license that expires the very same year and provides more than three times as much power, stands in stark contrast to Consumers Energy’ stated clean energy goals. The utility claims it will replace the lost generation from Palisades and its planned fossil-power plant closures with energy demand reduction, expanded renewable energy deployment, and the purchase of four natural gas power plants, which an MPSC administrative law judge warned should not feature “an acquisition premium.”
However, these plans appear to have changed. Consumers Energy is now threatening to keep their 1,388 MW Campbell coal-fired power plant online, despite announcing intentions to close the plant in 2025. Even before this threat, the 2018 IRP includes several dubious claims. The utility ostensibly charts out a plan to transition to a clean energy future by closing all of its coal power plants and not building any new natural gas plants. Instead, the utility plans to purchase (not build) four gas plants and, by 2040, will supply 41% of its power generation through market purchases, a fairly clear attempt to obfuscate the sources of its planned power procurement. If Palisades is replaced by gas power, Michigan’s annual greenhouse gas emissions will increase by at least 2.8 million metrics tonnes (MMT), and by roughly 5.9 MMT if replaced by the continued operation of the Campbell coal power plant.
Fortunately, nuclear energy is enjoying a groundswell of support from pro-nuclear climate activists, who wrote a letter to Michigan Governor Gretchen Whitmer, pleading for her to intercede in the shutdown of Palisades. Additionally, although in favor of closing the plant, Michigan Attorney General Dana Nessel recently filed a motion with the NRC to request a hearing on the already approved transfer of Palisades from Entergy to Holtec, expressing concern about insufficient decommissioning funds.
The 2021 Bipartisan Infrastructure Bill allocated $6 billion to the U.S. Department of Energy to establish the Civil Nuclear Credit Program to keep existing nuclear power plants operational. These federal funds, coupled with Consumers Energy’s rate base, should be sufficient to operate the Palisades power plant through its current license term. Entergy, Consumers Energy, the MPSC, and political leaders in Michigan should halt the closure of Palisades until a more thorough economic analysis determines if the Civil Nuclear Credit Program can bridge the money gap for the Palisades nuclear plant.
Keeping Palisades online will preserve 600 well-paid jobs and a safe, reliable backbone of Michigan’s clean energy portfolio. Prematurely closing Palisades does not lend credibility to Michigan’s clean energy goals. If Michigan is serious about decarbonization, the state’s leaders should step in and ensure that Palisades operates through 2031.