Constellation to restart Three Mile Island nuclear plant in deal with Microsoft
Catherine Morehouse
5 min read
Power giant Constellation Energy announced Friday that it had inked a 20-year deal with Microsoft to supply power to an AI data center from the shuttered Three Mile Island nuclear plant in Pennsylvania, the latest sign of a revival for the nuclear sector driven by the voracious energy demand from the technology industry.
The agreement — which would restart a reactor at the plant that was closed in 2019 and slated for decommissioning — comes as major tech companies scramble to secure reliable carbon-free power supplies to run their power-hungry data and artificial intelligence centers.
Those tech companies are eyeing the aging fleet of nuclear reactors, many of which — like the Three Mile Island plant that suffered the U.S.'s worst nuclear accident more than 45 years ago — will require significant investments to keep producing power.
Only two new reactors have been built in recent decades — a pair recently brought online at Georgia Power's Vogtle plant, which suffered huge cost overruns and delays. But power companies' reticence in building new large reactors appears to be fading because of the projected spike in electricity demand from new AI data centers and the difficulty in developing the small, modular reactors that many utilities have hoped would be the next wave in nuclear technology.
Paul Adams, a spokesperson for Constellation, said in an email the company will spend $1.6 billion of its own money to restart the plant, and is not using any state or federal aid. While the plant will receive federal tax credits from the Inflation Reduction Act for the power produced, those dollars are not behind the restart, he added.
“The IRA nuclear production tax credit would be available to the plant just as it would to any other nuclear plant, but that’s not what’s driving this — the [supply contract] with Microsoft is what is making this happen,” said Adams.
Microsoft will purchase power from the plant in an effort to offset the additional demand its data centers have put on the regional 13-state power grid operated by PJM Interconnection, according to the press release. Additional terms of the deal with Microsoft are not publicly available, according to Adams.
"This agreement is a major milestone in Microsoft's efforts to help decarbonize the grid in support of our commitment to become carbon negative,” said Bobby Hollis, vice president of energy at Microsoft, in a statement. “Microsoft continues to collaborate with energy providers to develop carbon-free energy sources to help meet the grids' capacity and reliability needs."
Consumer advocates in the PJM region, which stretches from Chicago to the Mid-Atlantic coast, had warned that the rise of data centers could present risks to customers and the climate as tech companies began to eye direct purchases of power from large nuclear plants in the region — possibly pulling their supplies out of the wider system.
The region has seen requests for “co-located” facilities — where a private company with large electricity demand connects its facility directly to the power plant — grow to 5 gigawatts, or about the equivalent of the capacity of five nuclear reactors.
Federal power regulators are planning to examine the wider implications of these deals as they assess whether to greenlight Amazon’s request to pull power from the Susquehanna Steam Electric Station in Salem, Pennsylvania this fall.
Three Mile Island shuttered in 2019 due to economic pressures, but the plant is also famous for a 1979 incident at Unit 2 where a cooling system malfunction led to a release of radiation in the area impacting around 2 million people in the state.
It was considered the most serious nuclear accident in the U.S., and undermined public support for nuclear power, led to heightened safety regulations and drove up costs and construction timelines for new plants.
Those concerns have also triggered a backlash that has halted the development of a permanent nuclear repository at Nevada's Yucca Mountain for the growing volume of radioactive waste fuel from the 93 reactors currently operating in the United States — a significant hurdle for the future of the industry.
Constellation is planning to rename the 800 megawatt Unit 1 of the plant the Crane Clean Energy Center after former Exelon CEO Chris Crane. The company says Unit 1 “is a fully independent facility, and its long-term operation was not impacted by the Unit 2 accident.”
The company will need to obtain approval from the Nuclear Regulatory Commission to restart the plant, according to Adams. Constellation expects the NRC review to wrap up in 2027 and for the plant to return to operation by 2028. They hope to operate the plant through at least 2054.
A spokesperson for the NRC said it had not yet received an application from the company, and would not issue a timeline for its work until then.
Constellation owns the largest nuclear fleet in the country and its executives have been saying for months that they are well positioned to capitalize on the surge in interest in nuclear power. The company’s share price surged more than 15 percent following the announcement.
“Powering industries critical to our nation’s global economic and technological competitiveness, including data centers, requires an abundance of energy that is carbon-free and reliable every hour of every day, and nuclear plants are the only energy sources that can consistently deliver on that promise,” said Joe Dominguez, president and CEO, Constellation, in a statement.