Three Mile Island reopens and sells its electricity to Microsoft

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Three Mile Island, the site of the worst nuclear disaster in the United States, is reopening and will sell power exclusively to Microsoft as the company seeks energy sources to fund its AI ambitions.

Constellation Energy said Friday that its Unit 1 reactor, which was shut down five years ago, is expected to restart in 2028, pending approval from the nuclear regulator. Microsoft will buy the carbon-free energy generated there to power its data centers that support artificial intelligence.

Financial terms of the 20-year contract, which Constellation called the largest in its history, were not disclosed.

“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 24/7. Nuclear power is the only energy source that can consistently deliver on that promise,” said Constellation CEO Joe Dominguez in a press release.

Clean energy advocates and businesses see nuclear as a source of carbon-free energy that provides a reliable baseload source. A major advantage is that, unlike wind and solar, nuclear can remain on 24/7.

However, nuclear energy has been criticized for decades by environmental groups because of its waste. In the United States, there is still no permanent storage facility for this waste; instead, it is stored in over 70 active and decommissioned facilities across the country.

According to Constellation, the reopening of Unit 1 will create 3,400 direct and indirect jobs and add more than 800 megawatts of electricity to the grid. It is also expected to increase the GDP of the US state of Pennsylvania, where the plant is located, by $16 billion.

Constellation (CEG) shares rose more than 16% in midday trading.

Three Mile Island, near Harrisburg, is best known as the worst accident at a commercial nuclear power plant in US history, when a partial meltdown occurred in one of the two reactors. Reactor Unit 2, which is located next to Unit 1, has been closed since the disaster in 1979.

The agreement is made possible by President Joe Biden's climate law, which provides billions in tax breaks to promote clean energy from nuclear power in addition to wind, solar and clean hydrogen. The Biden administration and Congress have also invested billions in funding to prevent the closure of old power plants that are slated for closure.

In the United States, there are “not many historical precedents for regulatory approval” to restart idle power plants, says Alan Ahn, deputy director for nuclear energy in the climate and energy program at the Third Way think tank.

Regulators and companies are working to restore power to the Palisades nuclear power plant in Michigan. The plant was slated for closure until the federal government stepped in with more than $1 billion to save it. Three Mile Island has been shut down for several years, Ahn added.

But as tech giants look for new energy sources to meet their AI needs, Ahn said companies are increasingly targeting nuclear power because it is carbon-free and helps them meet their ambitious climate goals.

“When you talk about the increased energy demand from artificial intelligence, data centers basically have to run at full capacity 24 hours a day. There aren't many alternatives other than nuclear power,” Ahn said. “It's becoming pretty clear that technology companies are really looking at nuclear power intensively.”

“This agreement is an important milestone in Microsoft's efforts to help decarbonize the power grid, supporting our commitment to become carbon negative,” said Bobby Hollis, vice president of energy at Microsoft, in the press release.

– CNN's Ella Nilsen contributed to this report

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