Inactive US nuclear power plant restarts only to meet Microsoft AI power needs

Opponents of nuclear energy will not like to hear this: Not only is an inactive nuclear power plant set to be restarted, but it is also the very plant that has had the worst nuclear accident in the USA to date. And it gets even stranger: the electricity is sold exclusively to Microsoft, which uses gigantic amounts of electricity for its AI data centers!

The owner of Pennsylvania’s decommissioned Three Mile Island nuclear power plant will invest $1.6 billion to restart it and agree to sell all production to Microsoft as the tech giant seeks carbon-free electricity for its data centers to fuel the artificial intelligence boom, Bloomberg reported.

Constellation Energy Corp, the largest U.S. reactor operator, expects Three Mile Island to restart in 2028, according to a statement today. While one of the site’s two units was permanently closed nearly half a century ago following the worst nuclear accident in the U.S., Constellation planned to restart the other reactor, which was shut down in 2019 because it was not economically competitive.

Microsoft has agreed to purchase the power for two decades and declined to disclose financial details. This is the first time Microsoft has secured a dedicated, 100% nuclear facility for its use. The decision is the latest sign of rising interest in the nuclear industry as power demand for AI soars. More than a dozen reactors have remained in use over the past decade amid increasing 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 24/7.

“Policymakers and the market have received a huge wake-up call,” said Joe Dominguez, chief executive officer of Constellation, in an interview. “There is no version of the future of this country that does not rely on these nuclear facilities.”

Constellation – whose shares have soared this year thanks to growing investor awareness of the value of power plants – plans to finance the project with its own funds rather than seeking state or federal assistance. That’s in contrast to Holtec International, which is pursuing the only other known effort to restart a decommissioned 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 exploring the possibility of restarting a decommissioned reactor in Iowa, including to supply data center customers. But experts say there are few other decommissioned reactors that could be suitable for restart.

While Constellation is not averse to accepting outside financial support, Dominguez says government approvals are slow and he doesn’t want to wait. Work at Three Mile Island is set to begin immediately. The contract to power Microsoft from the 837-megawatt reactor is the largest power purchase agreement Constellation has ever signed.

The restart effort has been ongoing since early 2023, when Constellation began evaluating whether it would make sense to restart the reactor. Earlier this year, the company decided it wanted to pursue the project and began discussions with potential customers. Microsoft was immediately interested, Dominguez said.

“The purchase of nuclear power will support Microsoft’s plans to power its entire vast global network of data centers with clean energy by 2025,” said Bobby Hollis, vice president of energy at Microsoft, in an interview. This nuclear energy will be used to build out data centers in areas such as Chicago, Virginia, Pennsylvania and Ohio.

The software giant is overhauling its entire AI product line, and the resulting increase in demand for cloud computing is jeopardizing Microsoft’s plans to be carbon negative by 2030, the company said earlier this year. In the fiscal year that ended June 30, the company spent more than $50 billion on capital expenditures, mainly on expanding data centers, and plans to increase that figure in the current fiscal year.

While the nuclear supplemental power will support Microsoft’s climate goals, it won’t solve the biggest problem – emissions from the concrete, steel and chips used in its data centers – Hollis said. “It’s not a simple undertaking, but it’s easier than figuring out how to decarbonize the entire supply chain,” he said. Still, data centers are a useful customer for nuclear power. “We’re running 24/7.” “They’re running 24/7,” he said.

Microsoft isn’t the only tech company banking on nuclear power to fuel its AI ambitions. Earlier this year, Amazon’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 shut down in 2019, Dominguez said the equipment is still in good condition. Still, restarting it will require significant investment in the main transformer, turbine and cooling systems. The company will need to re-staff the plant and seek approval from the Nuclear Regulatory Commission. Constellation will also seek to extend its operating license through 2054 and plan to rename the plant the Crane Clean Energy Center, after the late Chris Crane, the former CEO of Exelon Corp. who spun off its generation unit in 2022 to become Constellation.

One of the biggest hurdles will be connecting the plant to PJM Interconnection LLC’s power grid, which has a long line of work. If PJM moves quickly enough, the plant could potentially be delivering power as early as 2027, according to Dominguez. “I’m so glad we’re undoing a terrible mistake that shouldn’t have happened,” he said. “It’s going to be very difficult to achieve the energy transition if we only want to use wind and solar and storage.”

FMW/Bloomberg

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