By Timothy Gardner

WASHINGTON (Reuters) – Holtec, the company wanting to reopen the Palisades nuclear reactor in Michigan, found corrosion cracking in steam generators "far exceeded" estimates, the U.S. nuclear power regulator said in a document published on Wednesday.

President Joe Biden's administration this week finalized a $1.52 billion conditional loan guarantee to the Palisades plant. This effort supports nuclear energy, which generates virtually emissions-free power, to curb climate change and to help satisfy rising electricity demand from artificial intelligence, electric vehicles, and digital currency.

Palisades, which shut under a different owner in 2022, aims to be the first modern U.S. nuclear power plant to reopen after being fully shut.

A summary of an early September call between the U.S. Nuclear Regulatory Commission (NRC) and Holtec published on Wednesday stated that indications of stress corrosion cracking in tubes in both of Palisade's steam generators "far exceeded estimates based on previous operating history." It found 1,163 steam generator tubes had indications of stress cracking among more than 16,000 tubes in the units.

Steam generators are sensitive components that require meticulous maintenance and are among the most expensive units at a nuclear power station.

Holtec hopes to return the plant to operation late next year. Patrick O'Brien, a company spokesperson, mentioned that the results of the inspections "were not entirely unpredicted" as the standard system "layup process", or procedure for maintaining the units, was not followed during the plant's shutdown.

However, he stated the return of Palisades remains on schedule, and Holtec plans to fix rather than replace the steam generators, which he claimed would last for 30 years after repairs.

"We expect the repair strategy will be to 'unplug' approximately 300 tubes per steam generator that were plugged at original installation, and then address the tubes found during inspections by plugging approximately 20% of the tubes that cannot be repaired easily and repairing the remaining 80% with sleeving, a common and proven repair strategy," O'Brien explained.

Holtec still needs permits from the NRC. "Holtec must ensure the generators will meet NRC requirements if the agency authorizes returning Palisades to operational status," an NRC spokesperson said.

The NRC indicated last month that preliminary inspection results "identified a large number of steam generator tubes with indications that require further analysis and/or repair."

Issues with steam generators can pose significant challenges for nuclear power plants. Parts of the San Onofre Nuclear Generating Station in California were shut down in 2012 after steam generators with design flaws leaked. Problems with new generators led to the closure of the plant in 2013.