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.

The administration of President Joe Biden finalized this week a $1.52 billion conditional loan guarantee to the Palisades plant. It is part of an effort by the administration to support 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.

A Nuclear Regulatory Commission spokesperson said, “Holtec must ensure the generators will meet NRC requirements if the agency authorizes returning Palisades to operational status.”

Holtec, which has said it wants to return the plant to operation late next year, did not immediately respond to a request for comment.

A summary of an early September call between the NRC and Holtec published on Wednesday said indications of stress corrosion cracking in tubes in both of the plant’s steam generators “far exceeded estimates based on previous operating history.” It found 1,163 steam generator tubes had indications of the stress cracking. There are more than 16,000 tubes in the units.

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

The U.S. nuclear regulator said last month that preliminary results from inspections “identified a large number of steam generator tubes with indications that require further analysis and/or repair.”

Steam generators are sensitive components of a nuclear power plant that require meticulous maintenance and are expensive to replace.

(Reporting by Timothy Gardner; Editing by Andrea Ricci)