US Department of Energy to Lend $4.4 Billion to Restart Three Closed Nuclear Plants

The United States Department of Energy is directing up to $4.4 billion in loans to support the revival of three nuclear plants that had been shut down.¹ Located in Michigan, Pennsylvania, and Iowa, these facilities are projected to add a combined 2.25 gigawatts of electrical capacity to the nation's grid.¹ This level of output is estimated to be sufficient to provide electricity for around 2 million businesses and households.¹ This effort is historic, as no commercial nuclear facility in the U.S. has ever returned to service after initiating the formal process of decommissioning.¹

The primary reason all three plants were previously closed, despite having time remaining on their operating licenses, was economic.¹ Their electricity had become too costly to generate compared to other sources available in the wholesale market.¹ For instance, analysis before the Duane Arnold plant's closure suggested that moving to less expensive power sources, including wind generation, would save Iowa consumers $300 million.¹ Similarly, the operational reactor at Three Mile Island was deactivated in 2019 after Pennsylvania's legislature opted against providing financial subsidies to keep it running.¹

A significant shift in market dynamics is now driving the effort to bring these plants back online.² Two of the facilities have arranged agreements with major technology companies that need zero-carbon energy to operate their data centers.² These tech firms are reportedly willing to pay higher prices for electricity to meet their clean energy goals.² This trend aligns with the Trump administration's active promotion of nuclear power for artificial intelligence and manufacturing, which includes issuing billions in loans to upgrade existing facilities.²

The Duane Arnold facility in Iowa, which first began producing power in 1975, is one of the plants slated for revival.³ It had been scheduled for a permanent shutdown in October 2020.³ However, the plant ceased operations two months ahead of schedule, in August 2020, after it sustained damage from a derecho storm.¹ The plant's owner, NextEra Energy, has conveyed optimism through its CEO, John Ketchum, about the feasibility of restarting the facility.¹

NextEra Energy is partnering with Google on the project with the objective of bringing the Duane Arnold plant back into service.¹ The current target for the plant's return to operation is early 2029.¹ A long-term agreement with a hyperscale data center operator is a key component of the financial strategy for the restart.² John Ketchum has indicated that this arrangement ensures that the costs associated with the restart will not be shouldered by Iowa's residential customers.²

In Michigan, the Palisades plant generated electricity from 1971 until its closure in 2022.¹ The shutdown happened when its owner at the time, Entergy, made the decision to withdraw from the wholesale energy market.¹ At the time of its closure, the plant's federal operating license was still valid and was not due to expire until 2031.¹ Following the shutdown, Holtec International purchased the plant and began decommissioning work that was specifically designed to be reversible.¹

The campaign to restart Palisades received a major boost when the state of Michigan provided public funding to encourage the effort.¹ Subsequently, the Biden administration authorized a $1.5 billion loan in 2024 to help finance the plant's revival.¹ The Trump administration has continued the disbursement of these loan funds.¹ This loan for Palisades, combined with another for Three Mile Island, accounts for over half of the total federal lending initiative for restarting nuclear plants.¹

As stipulated by its power purchase contracts, the Palisades facility must be operational and generating electricity by March 2027.¹ The recommissioning process has encountered at least one technical problem.¹ In August, Holtec was forced to temporarily suspend the process of loading fuel into the reactor.¹ This pause was required after it was found that one of the fuel assemblies had tilted and was no longer in its correct vertical position.¹

The third facility, now called the Crane Clean Energy Center, is located on Three Mile Island in Pennsylvania.¹ This site was where the United States experienced its most severe accident at a commercial nuclear plant in 1979.¹ That incident led to the permanent destruction of one of the plant's two reactors.² The second reactor unit was not damaged in the 1979 accident and was able to continue operating for many years.²

The remaining operational reactor at Three Mile Island was taken offline in 2019.¹ In 2024, Constellation Energy declared it would invest $1.6 billion to bring the reactor back into service.¹ This investment is underpinned by a 20-year power contract with Microsoft and a $1 billion loan from the Department of Energy.¹ Constellation Energy is aiming to reconnect the reactor to the electrical grid in 2027.¹ If these schedules hold, both Palisades and the Crane Clean Energy Center are expected to be supplying power approximately two years before the Duane Arnold plant.¹

Advocates for the loan program present it as a sensible way to address growing energy needs.¹³ Todd Allen of the University of Michigan has asserted that recommissioning an existing reactor offers a faster and less expensive path to large-scale power than constructing a new facility.¹ Jennifer Gordon from the Atlantic Council has also characterized the use of federal loan mechanisms as an excellent method for obtaining necessary electricity.³ The World Nuclear Association views the recommissioning of nuclear units as a positive step, while also stating that it is preferable to keep plants from closing in the first place.³

The initiative has, however, attracted criticism and warnings from other observers.² Edwin Lyman of the Union of Concerned Scientists has pointed out that the majority of American nuclear plants were constructed between 1970 and 1990.² He cautioned that these facilities were not designed to handle the escalating severity of natural disasters driven by climate change.² Separately, Jack Spencer from The Heritage Foundation has argued that providing taxpayer-backed federal financing is inappropriate, as high power demand already makes these restart projects low-risk ventures.²