(Resubmitted to correct typo in the word “companies” in the third paragraph)
(Reuters) – Constellation Energy Inc and Microsoft Corp said on Friday they have signed an energy deal to help restart a unit of the Three Mile Island nuclear plant in Pennsylvania in what would be the first-ever restart of its kind.
However, key regulatory permits have not been obtained to start operating the new plant, organizers say.
Big tech companies have driven a surge in U.S. electricity demand for data centers needed to expand technologies like artificial intelligence and cloud computing. Nuclear power, which is nearly carbon-free and widely considered more reliable than energy sources like solar and wind, has become a popular choice for tech companies with uninterrupted power needs and climate commitments.
“Nuclear power plants are the only energy source that can consistently deliver on this promise,” Constellation CEO Joe Dominguez said in a statement.
Constellation shares were up more than 20% by early afternoon to $251.42, and are up more than 100% so far this year.
The companies said the power from the plant will be used to offset electricity use at Microsoft’s data center.
Relaunching the Three Mile Island plant, where a separate unit suffered a partial meltdown in 1979 in one of the nation’s largest industrial accidents, still requires federal, state and local approvals.
Constellation has not yet filed an application with federal nuclear regulators to restart the plant.
“Constellation needs to explain its reasons for restarting, so we stand ready to work with the company on next steps,” said Scott Purnell, a spokesman for the NRC.
Constellation said it expects the NRC review to be completed in 2027.
billion dollar bet
The deal will help restart the first unit of the five-decade-old facility in Pennsylvania, which was shut down for economic reasons in 2019. The second unit, which has been in a meltdown, will not be restarted.
Constellation plans to spend about $1.6 billion to revive the station, which it expects to begin operating by 2028.
Reuters first reported the possible restart in July.
Constellation was hoping for federal support for Three Mile Island similar to what was offered to the Palisades nuclear power plant, which received a $1.5 billion conditional loan to relaunch it from the Biden administration, sources told Reuters at the time.
Under the deal between Constellation and Microsoft, Microsoft will buy power from the recommissioned plant for 20 years. The Three Mile Island unit will provide 835 megawatts of electricity, or enough to power about 700,000 homes.
Restarting the project is expected to be difficult, but with demand for energy rising, the nearly carbon-free electricity source is seeing renewed support from technology companies.
“This agreement represents a major milestone in Microsoft’s efforts to help decarbonize the grid in support of our commitment to becoming carbon negative,” Bobby Hollis, Microsoft’s vice president of energy, said in a statement.
Microsoft also signed a power purchase agreement with Washington state-based Helion Nuclear Energy, which says the plant will be operational by 2028, much earlier than many scientists say nuclear power will become commercial.
Top tech executives, including Sam Altman, CEO of OpenAI and developer of ChatGPT, and Bill Gates, co-founder of Microsoft, have called for nuclear power as a solution to the growing energy needs of data centers.
Altman backed Oklo Nuclear Power, which went public through an open merger in May, and is chairman of its board, while TerraPower, a startup co-founded by Gates, began operating a nuclear facility in June.
According to the Energy Information Administration, nuclear plants generated about 18.6% of the total electricity in the United States last year.
Power supply deals with AI data centers are also facing increasing scrutiny. A group of electric utility companies challenged a similar deal between Talen Energy and Amazon (NASDAQ:) earlier this year, arguing that it could lead to higher costs for customers or hamper grid reliability.
Financial details of the deal between Microsoft and Constellation were not disclosed. Both companies declined to provide further details about the agreement.