September Energy Policy: Nuclear Restarts, Tax Shifts, Wind Pauses

As the U.S. energy sector continues to evolve, regulatory decisions, new investments, and shifting federal guidance are reshaping the path forward for utilities, developers, and corporate buyers alike. September has been a month of significant activity, from advanced nuclear commitments to changes in tax credit rules and offshore wind developments. Here’s a look at the key updates you should know.

TVA Signs First U.S. Gen-IV Reactor Power Deal

The Tennessee Valley Authority (TVA) has signed a power purchase agreement (PPA) with Kairos Power to buy power from the company’s planned Hermes 2, a molten salt nuclear reactor in Oak Ridge, Tennessee. The deal makes TVA the first U.S. utility to contract for electricity from a 50 MW Gen-IV reactor.

• The plant is slated to begin operations in 2030. The project will supply 24/7 carbon-free electricity into TVA’s system to support Google’s rapidly growing data centers in Tennessee and Alabama.
• The new TVA–Kairos PPA comes less than a year after Kairos and Google unveiled a landmark agreement to develop 500 MW of advanced nuclear capacity by 2035. That agreement was effectively the first corporate commitment in the U.S. to a multi-reactor small modular reactor (SMR) “orderbook.”

FERC Approves Cost Recovery for Extended Plant Operations

The Federal Energy Regulatory Commission on Friday approved Consumers Energy and Constellation Energy to recover the costs of continuing to run power plants they had planned to retire, following U.S. Department of Energy orders. 

• The costs of keeping the 1,560-MW, coal-fired J.H. Campbell plant in Michigan online will be shared across the Midcontinent Independent System Operator’s northern and central regions.
• Expenses related to running two, 380-MW oil- and gas-fired units at Constellation’s Eddystone plant in Pennsylvania will be spread across the PJM Interconnection’s footprint.
• Consumers and Constellation will need to return to FERC for approval to recoup their costs. Consumers reported to the Securities and Exchange Commission last month that it spent $29 million in the first 38 days of the DOE order to keep the Campbell plant online.
• Depending on how many power plants DOE orders to keep running under its Federal Power Act section 202(c) authority, the cost to ratepayers could be as high as $6 billion in 2028.

Restarting U.S. Nuclear Reactors

The Nuclear Regulatory Commission is reviewing and granting licenses for existing shuttered nuclear plants to restart. Rising power demand is behind recent decisions by the owners of idled U.S. nuclear power plants to try to restart operations later this decade. This is line with President Trump’s Executive Order to speed up licensing of nuclear power plants.

• The 800 MW Palisades nuclear plant in Michigan is slated to restart  operations later this year. Palisades is now authorized to receive new fuel and formally transition licensed reactor operators to on-shift status. Holtec expects to spend approximately $500 million on restart. Palisades would be the first U.S. plant to be brought back online after decommissioning.
• NextEra Energy has taken preliminary steps to restart the 600-MW single unit reactor at its Duane Arnold nuclear plant in Iowa, which shuttered in 2020. NextEra expects to spend $50 million to $100 million this year to recommission Duane Arnold and expects to bring it online in the fourth quarter of 2028.
• The highest-profile reactor restart project involves the undamaged 835-MW reactor at Constellation Energy’s Three Mile Island power plant, now called the Crane Clean Energy Center. Constellation has said it aims to resume operations at Crane by 2028.

NV Energy Seeks Exit Window for Developers

NV Energy has requested permission from the Federal Energy Regulatory Commission to approve a waiver so it could open a one-time, 60-day window to give interconnection customers a chance to exit the interconnection process without paying a withdrawal fee in the wake of changes to clean energy tax credit rules and other actions by the Trump administration.

• According to NV Energy, “the rapid return of commercial deposits may also allow renewable developers to focus their development efforts on their projects that may be able to obtain tax credits, are not solar or wind and sited on federal land, or on their projects that remain viable because they are needed to meet state renewable standards, regardless of the changed economics.”

Treasury Alters Renewable Tax Credit Guidance

The U.S. Department of the Treasury has released guidance altering the criteria that most wind and solar projects must use to show they started construction before the deadline to qualify for the 45Y and 48E tax credits.

• Previously, developers had to prove that 5% or more of the total cost of the project had been paid. Treasury’s new guidance stipulates that construction on wind and solar projects “begins when physical work of a significant nature begins,” whether the work is off-site or on-site.
• According to the guidance, off-site physical work can be done on mounting equipment, racks and rails, inverters, transformers, and other power conditioning equipment, so long as it is not held in the inventory of the manufacturer. 
  
  

Offshore Wind Project Halted by BOEM

Revolution Wind, a 700-MW offshore wind farm close to being completed and set to supply energy to Rhode Island and Connecticut, stopped work Friday in compliance with an order from the Department of the Interior’s Bureau of Ocean Energy Management (BOEM).

• According to Ørsted, which owns the project in a 50/50 joint venture with Global Infrastructure Partners’ Skyborn Renewables, the project is fully permitted and 80% complete with all offshore foundations installed and forty-five out of sixty-five wind turbines installed.
• BOEM’s Acting Director Matthew Giacona has said that the order is intended to “protect U.S. national security” and prevent “interference with reasonable uses of the exclusive economic zone, the high seas, and the territorial seas.”
• This is in line with the U.S. Department of Commerce probe into “the effects on the national security of imports of wind turbines and their parts and components.”

Looking Ahead

These developments highlight both the opportunities and uncertainties shaping the energy sector. Advanced nuclear is gaining traction as a reliable, carbon-free option, while regulatory decisions continue to influence the economics of coal, gas, and renewable projects. With policy shifts still unfolding, energy companies, investors, and developers will need to stay nimble as they plan for the years ahead.