• Microsoft and Constellation Energy have announced a historic deal to revive a unit of the Three Mile Island nuclear plant.
• The power generated will offset Microsoft's data center electricity use, marking a shift towards reliable, carbon-free energy sources in the tech industry.
• The revival of the plant, retired in 2019, faces regulatory hurdles and is expected to be completed by 2028.
• Major tech executives, including Microsoft's co-founder Bill Gates, have touted nuclear energy as a solution to the growing power needs of data centers.

In a groundbreaking move, Constellation Energy and Microsoft have entered into a power agreement aimed at reviving a unit of the Three Mile Island nuclear plant in Pennsylvania. This marks the first-ever restart of its kind, according to the companies' announcement on Friday. However, the necessary regulatory permits for the plant's new life have not yet been filed, as stated by regulators.

The tech industry's rapid growth has led to a sudden surge in U.S. electricity demand for data centers. These centers are essential for expanding technologies like artificial intelligence and cloud computing. As a result, nuclear energy, which is nearly carbon-free and generally considered more reliable than energy sources like solar and wind, has become a popular option for technology companies with uninterrupted power needs and climate pledges.

Nuclear plants are the only energy sources that can consistently deliver on that promise, said Constellation Chief Executive Officer Joe Dominguez. This statement underscores the importance of nuclear energy in meeting the growing power demands of the tech industry.

The Impact on Constellation and Regulatory Hurdles

The news of the power deal led to a significant increase in Constellation's shares, which were up more than 20% by early afternoon to $251.42 and have risen more than 100% so far this year. The power generated from the plant would be used to offset Microsoft's data center electricity use, the companies said.

However, the relaunch of Three Mile Island, which had a separate unit suffer a partial-meltdown in 1979 in one of the biggest industrial accidents in the country's history, still requires federal, state, and local approvals. Constellation has yet to file an application with federal nuclear regulators to restart the plant.

It's up to Constellation to lay out its rationale for justifying restart, so we're prepared to engage with the company on next steps, said Nuclear Regulatory Commission (NRC) spokesperson Scott Burnell. Constellation said it expected the NRC review process to be completed in 2027.

The Revival Plan and Tech Industry's Support

The deal would help enable a revival of Unit 1 of the five-decades-old facility in Pennsylvania that was retired in 2019 due to economic reasons. Unit 2, which had the meltdown, will not be restarted. Constellation plans to spend about $1.6 billion to revive the plant, which it expects to come online by 2028.

Under the Constellation-Microsoft deal, Microsoft will purchase energy from the restarted plant for a period of 20 years. The Three Mile Island unit will provide 835 megawatts of electricity, or enough to power about 700,000 homes. A restart is expected to be challenging, but as power demand spikes, the virtually carbon-free electricity source is seeing renewed support from tech companies.

This agreement is a major milestone in Microsoft's efforts to help decarbonize the grid in support of our commitment to become carbon negative, Bobby Hollis, vice president of energy at Microsoft, said in a statement. Microsoft has also signed a power purchase agreement with Washington-state fusion company Helion, which says the plant will be online by 2028, far earlier than many scientists say fusion will become commercial.

Major tech executives, including ChatGPT developer OpenAI CEO Sam Altman and Microsoft co-founder Bill Gates, have touted nuclear energy as a solution to the growing power needs of data centers. Altman has backed and is the chairman of nuclear power startup Oklo, which went public through a blank-check merger in May, while TerraPower - a startup Gates co-founded - broke ground on a nuclear facility in June.