The federal government has conditionally awarded PG&E about $1.1 billion to keep Diablo Canyon nuclear power plant running past its original closure date in 2025.

The funding, announced Monday morning, comes from the U.S. Department of Energy’s Civil Nuclear Credit Program — a $6 billion funding initiative to help keep struggling nuclear power plants operational.

“This is a critical step toward ensuring that our domestic nuclear fleet will continue providing reliable and affordable power to Americans as the nation’s largest source of clean electricity,” U.S. Secretary of Energy Jennifer M. Granholm said in a news release Monday. “Nuclear energy will help us meet President Biden’s climate goals, and with these historic investments in clean energy, we can protect these facilities and the communities they serve.”

Diablo Canyon Power Plant was scheduled to close its two reactors in 2024 and 2025, but a recent push from the state and federal governments has reversed that course because the state has been unable to procure enough carbon-free electricity to replace the plant and meet its clean energy goals.

Diablo Canyon, located between Avila Beach and Morro Bay, can produce about 2,200 megawatts of baseload electricity, or 8.6% of the state’s electricity supply, according to PG&E.

The federal funding will help PG&E with costs associated with relicensing the power plant.

The utility company had applied for the funding on Sept. 2, the same day Gov. Gavin Newsom signed Senate Bill 846 into law. That law authorized the California Department of Water Resources to loan PG&E the $1.4 billion and created a path forward to ensuring the nuclear power plant can continue to operate until 2030.

“This is another very positive step forward to extend the operating life of Diablo Canyon Power Plant to ensure electrical reliability for all Californians,” PG&E Corp. CEO Patti Poppe said in a news release Monday. “While there are key federal and state approvals remaining before us in this multi-year process, we remain focused on continuing to provide reliable, low-cost, carbon-free energy to the people of California, while safely operating one of the top performing plants in the country.”

The final amount of money awarded to PG&E is subject to change based on actual costs, according to the utility company.

Should the U.S. Nuclear Regulatory Commission deny PG&E’s relicensing application, the funding would be cut off.

PG&E recently sent a letter to the Nuclear Regulatory Commission asking whether the agency would prefer it submit an entirely new relicensing application, or if it could pick up from where it left off when it last applied in 2009.

That 2009 application was withdrawn in 2018 when the utility reached agreements with environmental groups to close the plant in 2025 and replace it with solar and other forms of renewable energy. The utility had wanted to extend the nuclear power plant’s life to 2045.

“This investment creates a path forward for a limited-term extension of the Diablo Canyon Power Plant to support reliability statewide and provide an on ramp for more clean energy projects to come online,” Newsom said in a Monday news release. “I thank the Biden-Harris Administration for this critical support and the California Legislature for moving quickly to make this award possible. I look forward to our continued work together to build a clean, affordable and reliable energy future for our state.”

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