The Duane Arnold nuclear plant northwest of Cedar Rapids, Iowa is pressing ahead with plans to restart operations by the end of the decade after shutting down for economic reasons in 2020.
The plant is the third – and likely the last – mothballed reactor in the U.S. that is in shape to come back online to support growing electricity demand in the U.S.
Duane Arnold would follow similar restarts planned for the Palisades nuclear plant in Michigan and Three Mile Island in Pennsylvania, which plan to resume operations later this year and in 2027, respectively, subject to approval by the Nuclear Regulatory Commission.
The Federal Energy Regulatory Commission approved a request last week from NextEra Energy, Duane Arnold’s owner, to let the nuclear plant reconnect to the electric grid. NextEra sees Duane Arnold restarting operations by the fourth quarter of 2028 at the earliest, according to FERC filings.
“While a significant amount of work needs to be done before the facility could be restarted, FERC’s decision is another positive step in the process,” Neil Nissan, a NextEra spokesperson, said in a statement to CNBC.
Power purchase agreement
With big technology companies looking to feed more nuclear power on to the grid to fuel the electricity-hungry data centers they are building to train artificial intelligence, Florida-based NextEra is aiming to win a lucrative power purchase agreement to restart Duane Arnold. Three Mile Island, for example, is restarting with financial support from a power agreement with Microsoft.
“The recommissioning of Duane Arnold has received significant commercial interest from premier American companies,” Garrett Goldfinger, the NextEra executive in charge of the restart project, told FERC in a late July filing.
Duane Arnold would bring more than 600 megawatts of electricity back to the grid, equivalent to the electricity needs of more than 400,000 homes.
“If we’re successful in bringing Duane forward, that obviously creates a hot bed of data center activity around that facility,” NextEra CEO John Ketchum told investors on the company’s July earnings call.
‘Unicorn opportunities’
Duane Arnold, Palisades and Three Mile Island are three of the 10 U.S. reactors that closed over the past decade as nuclear power strained to compete against cheap natural gas and renewable energy.
Restarting these plants is the most concrete sign yet that the nuclear industry is coming back after years of financial struggles.
“These are unique opportunities because you don’t face the new build costs associated with nuclear,” Ketchum said on NextEra’s earnings call. “These are really unicorn-type opportunities.”
NextEra, the largest renewable power developer in the U.S., had previously divided up Duane Arnold’s grid connection among multiple solar farms that the company was developing in response to the demand in Iowa for lower cost electricity.
But the market last year started to shift back in favor of high-capacity nuclear power as the U.S. saw an unprecedented increase in electricity demand from industry and data centers, NextEra said in its filing to FERC.
NextEra is now consolidating those solar grid connections back into a single one for Duane Arnold after securing FERC approval. This will “provide commercial and financial certainty to support the recommissioning effort and expedite the resumption of clean, reliable operations at Duane Arnold,” Goldfinger told FERC.
Capital intensive
NextEra said the restart of Duane Arnold will be a “highly capital-intensive process.” It disclosed in its filing to FERC that it plans on spending as much as $100 million in 2025 alone on the project.
NextEra has placed orders for new transformers to replace the ones that were removed when the plant was shut down, although the transformers face significant supply chain constraints and will take about three years to deliver. The plant’s cooling towers, administration building and training center were also dismantled and need to be replaced.
The nuclear industry has a long history of projects delays, Goldfinger cautioned, and the Duane Arnold restart could take longer than expected if the transformers, for example, are delivered late.
While there are risks, Duane Arnold represents a financial opportunity for NextEra, the parent company of Florida Power & Light. The stock has barely moved this year despite growing power demand, a sharp reversal from 2024 when shares jumped 18% Since taking office in January, President Donald Trump’s repeated attacks on renewable energy have shaken investor confidence in solar and wind power.
Solar and wind projects will no longer be eligible for two key tax credits after 2027, which is expected to crimp demand for renewables. Duane Arnold restarting in 2028 could help offset some of the lost earnings from the phase out of the tax credits, Ketchum said on the July earnings call.
“You add Duane Arnold to the mix and that’s one of many ways that we have to continue to grow the business in the future,” Ketchum said.
Source: https://www.cnbc.com/