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UPDATE 2-U.S. rejects funding to re-open Michigan nuclear plant -Holtec

(Adds, background details on PG&E)

WASHINGTON, Nov 18 (Reuters) - The U.S. Department of Energy rejected Holtec International’s application for funding to reopen the Palisades nuclear power plant in Michigan, a Holtec spokesperson said on Friday.

Holtec bought the 805 megawatt Palisades plant in May to decommission the facility, which had struggled to compete with natural gas-fired plants and renewable energy. It was looking to reopen it with funding from the initial phase of the Energy Department’s $6 billion Civil Nuclear Credit program.

“We fully understood that what we were attempting to do, restarting a shuttered nuclear plant, would be both a challenge and a first for the nuclear industry,” said Patrick O’Brien, a spokesperson for Holtec.

The decision presents a hurdle for President Joe Biden’s administration which believes nuclear power is essential for combating climate change. Biden wants to make the power grid carbon free by 2035.

The DOE did not immediately respond to a request for comment.

Nuclear power produces toxic waste, currently held at 28 plants across the country.

ClearView Energy Partners, a nonpartisan research group, said in September that Palisades’ closure was “likely to be permanent.” Palisades was out of nuclear fuel, faced a control rod drive seal issue that needed to be fixed and likely needed a new company to operate it, as well as a buyer for the power it generates, ClearView said at the time.

The CNC program, launched by the DOE this year, is intended for plants in states with competitive electricity markets and funded by the infrastructure bill that passed last year.

The U.S. nuclear power industry’s 92 reactors generate more than half of the country’s carbon-free electricity. But about a dozen reactors have closed since 2013 in the face of competition from renewable energy and plants that burn plentiful natural gas.

In the first phase of the CNC program, the DOE prioritized plants that had already shut or announced intentions to close. Power utility PG&E Corp was the only other company to apply in the first phase, for its Diablo Canyon plant in California, slated to fully close by 2025. PG&E did not immediately respond to a request for comment about the status of its application. (Reporting by Timothy Gardner; additional reporting by Nichola Groom in Los Angeles; Editing by David Gregorio, Jonathan Oatis and Josie Kao)

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