Microsoft Deal Accelerates Three Mile Island Restart, Key Permits Still Required

(Refiles to correct a typo in ‘companies’ in paragraph three)

(Reuters) – Constellation Energy and Microsoft have entered into a power agreement aimed at reviving a unit of the Three Mile Island nuclear plant in Pennsylvania, marking a potential first-ever restart of such a facility, the companies announced on Friday.

However, the required regulatory permits for the plant’s renewal have not yet been submitted, according to regulatory authorities.

The demand for electricity in the U.S. has surged recently, largely driven by the needs of data centers tied to advancements in technologies like artificial intelligence and cloud computing. As a nearly carbon-free energy source, nuclear power has gained traction among technology firms that require a reliable power supply and have made climate pledges.

“Nuclear plants are the only energy sources that can consistently deliver on that promise,” stated Constellation Chief Executive Officer Joe Dominguez.

Constellation’s stock saw an increase of over 20% to $251.42 by early afternoon, doubling in value over the course of the year.

The energy generated from the plant would primarily offset Microsoft’s electricity consumption for its data centers, according to the companies.

The revival of Three Mile Island comes after its Unit 2 experienced a partial meltdown in 1979, one of the most significant industrial accidents in U.S. history. The restart plans still await approval from federal, state, and local authorities.

Constellation has not yet submitted its application to federal nuclear regulators to initiate the plant’s restart process.

“It’s up to Constellation to lay out its rationale for justifying the restart, so we’re prepared to engage with the company on next steps,” said a spokesperson for the Nuclear Regulatory Commission.

Constellation anticipates that the NRC review process could conclude in 2027.

BILLION-DOLLAR INVESTMENT

This agreement aims to facilitate the revival of Unit 1 of the nearly 50-year-old facility in Pennsylvania, which was shut down in 2019 for economic reasons. Unit 2, which experienced the meltdown, will not be brought back online.

Constellation plans to invest approximately $1.6 billion to revive the plant, with an expected operational date set for 2028.

Reports earlier this year indicated that Constellation hoped to receive federal assistance for the Three Mile Island facility similar to the $1.5 billion conditional loan provided to the Palisades Nuclear Generating Station for its restart.

Under the terms of the Constellation-Microsoft agreement, Microsoft will purchase electricity from the restarted plant over a 20-year period. The Three Mile Island unit is projected to generate 835 megawatts of electricity, enough to power around 700,000 homes.

A restart is likely to face challenges, but the rising demand for power has led to renewed interest in nuclear energy among tech companies.

“This agreement is a major milestone in Microsoft’s efforts to help decarbonize the grid in support of our commitment to become carbon negative,” stated Bobby Hollis, Microsoft’s Vice President of Energy.

In addition, Microsoft has signed a power purchase agreement with a fusion company in Washington state, with expectations that the plant will be operational by 2028, earlier than many experts predict fusion technology will become commercially viable.

Prominent tech leaders, including OpenAI CEO Sam Altman and Microsoft co-founder Bill Gates, have endorsed nuclear power as a solution to the increasing energy requirements of data centers.

Altman is also involved with a nuclear startup that recently became a publicly traded company, while TerraPower, co-founded by Gates, has begun construction on a nuclear facility.

According to data from the Energy Information Administration, nuclear plants contributed about 18.6% of the total electricity produced in the U.S. last year.

Power supply agreements related to AI data centers are facing heightened scrutiny. A similar agreement between another energy provider and a major tech company has sparked concerns from a coalition of electric utilities, which argue it could lead to increased costs for consumers or impact grid reliability.

Financial details regarding the Microsoft-Constellation agreement have not been disclosed, and further information about the deal has not been provided by the companies.