(Bloomberg) — The owner of the shuttered Three Mile Island nuclear plant in Pennsylvania will invest $1.6 billion to restart it, agreeing to sell all output to Microsoft Corp. as the tech titan seeks carbon-free electricity for data centers to fuel the artificial intelligence boom.
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Constellation Energy Corp., the largest U.S. nuclear reactor operator, plans to have Three Mile Island back online by 2028, according to a statement Friday. While one of the site’s two units permanently shut down nearly half a century ago after the worst U.S. nuclear accident, Constellation plans to reopen the other reactor, which closed in 2019 because it was not economically competitive.
Shares of Constellation Energy jumped as much as 22%, the most ever, to hit an all-time high on Friday.
Microsoft has agreed to buy the power for two decades and declined to disclose financial terms. It is the first time Microsoft has secured a dedicated, 100% nuclear facility for its use.
The move is the latest sign of growing interest in the nuclear industry as demand for AI power soars. More than a dozen reactors have shut down in the past decade amid growing competition from cheaper natural gas and renewables. But growing demand for electricity — from factories, cars and especially data centers — has fueled interest in nuclear plants that can provide carbon-free power around the clock.
“Policymakers and the market have been given a wake-up call,” Constellation CEO Joe Dominguez said in an interview. “There is no version of the future of this country that does not rely on these nuclear assets.”
Constellation, whose shares have surged this year on growing investor awareness of the value of power plants, plans to finance the project with its own funds rather than seek state or federal support. That contrasts with Holtec International, which is pursuing the only other disclosed effort to restart a shuttered reactor, with about $1.8 billion in conditional funding from the U.S. Department of Energy and the state of Michigan. NextEra Energy Inc. has also said it is considering restarting a shuttered Iowa reactor, in part to supply data center customers. But beyond those three reactors, experts say there are few other mothballed reactors that could be suitable for restart.
While Constellation is not opposed to outside financial support, Dominguez said government approvals are moving slowly and he doesn’t want to wait. Work at Three Mile Island is expected to begin immediately. The deal to supply Microsoft with electricity from the 837-megawatt reactor is Constellation’s largest power purchase agreement ever.
The reactor restart has been in the works since early 2023, when Constellation began evaluating whether it made sense to restart it. Earlier this year, the company concluded it wanted to pursue the project and began talking to potential customers. Microsoft immediately showed interest, Dominguez said.
The nuclear power purchase will allow Microsoft to run its vast global network of data centers on clean energy by 2025, Bobby Hollis, Microsoft’s corporate vice president of energy, said in an interview. The nuclear power will be used to power data center expansions in areas including Chicago, Virginia, Pennsylvania and Ohio.
While additional nuclear power will help Microsoft meet its climate goals, it doesn’t solve the most intractable problem: emissions from the concrete, steel and chips used in data centers, Hollis said.
“It’s not a simple task, but it’s easier than figuring out how to decarbonize the entire supply chain,” he said.
Data centers are an attractive customer for nuclear power, though. Wind and solar power can fluctuate, while a nuclear plant typically runs around the clock and requires a customer to take all that electricity, Hollis said. That’s why tech companies that sell cloud computing are an ideal option.
“We run 24 hours a day. They run 24 hours a day,” he said.
Microsoft isn’t the only tech company turning to nuclear power to fuel its artificial intelligence ambitions. Earlier this year, Amazon.com Inc.’s cloud computing division agreed to spend $650 million to acquire a data center campus connected to Talen Energy Corp.’s 40-year-old nuclear power plant on the Susquehanna River in Pennsylvania.
Although the Three Mile Island reactor was mothballed in 2019, Dominguez said the equipment is still in good condition. However, restarting it will require significant investments in the main transformer, turbine and cooling systems. The company will have to retool the facility and seek approval from the Nuclear Regulatory Commission. Constellation will also seek to extend its operating license through 2054 and plans to rename the facility the Crane Clean Energy Center, named after the late Chris Crane, the former CEO of Exelon Corp., which spun off its manufacturing unit to become Constellation in 2022.
One of the biggest hurdles will be connecting the plant to the power grid operated by PJM Interconnection LLC, which has a long backlog. If PJM can move quickly enough, Dominguez said the facility could potentially be ready to provide electricity as early as 2027.
“I am very pleased that we were able to correct a terrible mistake that should not have happened,” he said. “It will be much more difficult to achieve the energy transition if we only want to use wind, solar and storage.”
(Updated with actions moved to third paragraph.)
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