Michigan lawmakers consider more subsidies, incentives for nuclear power

• Michigan lawmakers are considering new tax incentives and other public support for nuclear energy, in hopes of attracting new investments to Michigan
• Citing high costs and concerns about nuclear waste storage, critics contend Michigan should instead invest in renewable energy
• The debate comes as Holtec International prepares to reopen the shuttered Palisades nuclear plant and add two ‘small modular reactors’ to the property

As the Palisades nuclear power plant inches closer to reopening, a bipartisan group of state lawmakers wants to offer tax breaks, grants and other incentives in hopes of making Michigan a national hub for the nuclear power industry.

During a House Energy Committee hearing Tuesday, lawmakers heard testimony on House bills 4124-4129, which aim to attract a nuclear energy industry that seems poised for growth amid technological advancements, taxpayer subsidies and skyrocketing energy demand from the tech industry.

“There is a race to bring technology online,” said Pauline Wendzel, R-Bainbridge Township, the committee’s chair and a key sponsor of the legislation. By incentivizing the industry, Wendzel said, Michigan could become “a global leader in developing the next generation of nuclear technologies.”

Together, the bills would authorize multimillion-dollar tax benefits for companies that research, develop and deploy new nuclear technologies in Michigan, along with grants and scholarships to train nuclear workers and pay them to stay in Michigan after graduation.

The total cost of those proposals is not yet clear. But according to the House Fiscal Agency, tax incentives for selling nuclear power from qualified facilities would be capped at $10 million per company, while research and development tax credits would be capped at $2.5 million annually statewide. 

Representatives from labor, utilities, energy advocacy groups and universities expressed support for the package, but some lawmakers and environmentalists questioned the fiscal impact on Michigan taxpayers and the industry’s environmental tradeoffs.

“Michiganders already face some of the highest energy rates in the nation—why continue burdening them with high costs?” wrote Tim Minotas, deputy legislative and political director for the Michigan Sierra Club, in testimony to the committee. “Rather than subsidizing an industry with an uncertain future, our state should invest in proven, rapidly deployable clean energy sources.”

Related:

• Palisades owners plan two more Michigan nuclear reactors
• Rural Michigan company sees big potential in Palisades nuclear restart
• Feds finalize $1.5B for Palisades; Michigan nuclear plant restart seems likely
• Nuclear power is having a moment in Michigan after Palisades

Supporters of the bills are particularly interested in making Michigan a proving ground for small modular reactors (SMRs), a new technology hailed for its potential to deliver safer, cheaper energy than traditional nuclear reactors. But construction and financial challenges have stymied efforts to make SMRs commercially viable, and there are just two operating globally today – neither of them in the US.

However, some expect the SMR industry to take off amid a global push to revitalize an industry long-plagued by high costs and fears about the environmental drawbacks.
The changing political dynamics come as politicians and energy officials look to drive down greenhouse gas emissions while expanding energy production to meet new demand from data centers, electric vehicles and increased use of air conditioning as climate change heats the globe.

Potential benefits, lingering concerns

The US is among 31 countries globally that have committed to tripling nuclear power capacity by 2050. 

In Michigan, that push began with efforts to reopen the Palisades plant, a 54-year-old facility in Van Buren County that shut down in 2020. State and federal officials have since authorized $3.1 million in subsidies to revamp the plant and offset the high cost of its power, although the restart plan still needs approval from the Nuclear Regulatory Commission.

Several provisions of Michigan's latest nuclear policy proposal would also likely benefit Holtec International, the company that owns Palisades. Holtec officials want to build two SMRs at the Palisades site, and have applied for $7.4 billion in federal loans to support the effort. 

The company has signaled support for the legislation alongside officials with DTE Energy and Indiana Michigan Power — which own Michigan’s two remaining nuclear power plants.

DTE plans to keep its 40-year-old Fermi II plant operational through at least 2045, said  Peter Dietrich, its senior vice president and chief nuclear officer. DTE also holds a license to build another reactor, and is “actively studying” the concept of SMRs, Dietrich said.

“We believe the package before you will help stimulate the industry of Michigan and ensure there is a well-trained workforce to support the industry into the future,” he said. 

But longstanding concerns about nuclear power’s high costs and environmental tradeoffs haven’t gone away. 

At Tuesday’s hearing, Rep. Betsy Coffia, D-Traverse City, appeared skeptical about how much the nuclear incentives would cost Michigan taxpayers. And Rep. Julie Brixie, D-Okemos, repeatedly questioned where nuclear plant operators would store the radioactive waste from their new or expanded facilities.

Despite decades of trying, the federal government has not established a permanent storage location for spent nuclear fuel. For now, it is indefinitely stored in metal-and-concrete casks at nuclear plant properties.