CEG Gets $1B US Loan to Revive Three Mile Island for Microsoft AI
Historic nuclear plant, shuttered in 2019, will be restarted to provide carbon-free power for Microsoft's growing data center operations under a 20-year deal.
Constellation Energy has secured a $1 billion federal loan to restart its Three Mile Island Unit 1 nuclear reactor, a landmark project anchored by a 20-year agreement to power Microsoft's burgeoning artificial intelligence operations.
The deal, announced Tuesday, marks a dramatic reversal for the plant, which was shut down in 2019 amid economic pressure from cheap natural gas. The revival highlights a strategic pivot in the U.S. energy landscape, where the voracious electricity demands of AI data centers are breathing new life into the nuclear power industry.
Shares of Constellation Energy, which have more than doubled over the past year on optimism around nuclear power's role in the clean energy transition, held steady in Tuesday trading, closing at $339.35. The company, with a market capitalization of over $105 billion, is the largest operator of nuclear plants in the United States.
The financial backing comes from the U.S. Department of Energy's Loan Programs Office, signaling a significant federal commitment to preserving and expanding the nation's nuclear fleet as a source of reliable, carbon-free baseload power. The Trump administration's backing of the loan underscores a bipartisan recognition of nuclear energy's importance for both grid stability and national security.
Under the terms of the deal, Microsoft will purchase the entire output from the newly christened Crane Clean Energy Center. The 20-year power purchase agreement (PPA) provides Constellation with a guaranteed revenue stream, significantly de-risking the estimated $1.6 billion refurbishment project. For Microsoft, it secures a long-term supply of the constant, clean power essential for its energy-intensive data centers.
"This is a watershed moment for the nuclear industry and the future of clean energy in America," said Joe Dominguez, CEO of Constellation, in a statement earlier this year. The company first announced its intention to reopen the plant in a press release in September, framing it as a direct response to the need for reliable power for the digital economy.
The plant, located near Harrisburg, Pennsylvania, is expected to resume operations by 2027 or 2028 and will supply between 819 and 837 megawatts of electricity directly to the grid that serves Microsoft's regional data centers. The project is expected to create hundreds of jobs and restore a major source of carbon-free electricity in the region.
The original Three Mile Island plant became infamous for the partial meltdown of its Unit 2 reactor in 1979, an event that stalled the growth of the U.S. nuclear industry for decades. However, Unit 1, which was not involved in the accident, operated safely for 45 years until its 2019 closure.
Today, the soaring energy consumption of tech giants like Microsoft, Google, and Amazon has changed the economic calculus. The International Energy Agency projects that electricity demand from data centers could more than double by 2026. This has forced technology companies to seek out massive, consistent power sources, making nuclear an increasingly attractive option.
The agreement between Constellation and Microsoft serves as a potential blueprint for future projects, pairing the reliability of nuclear power with the long-term demand of the technology sector. Analysts at Morgan Stanley have noted that such long-term contracts are critical for providing the financial certainty needed to invest in extending the life of existing plants or building new ones.
As the U.S. grapples with the dual challenge of meeting explosive growth in electricity demand while pursuing decarbonization goals, the revival of Three Mile Island stands as a powerful symbol of nuclear energy's unexpected comeback.