Microsoft Invests in Three Mile Island Nuclear Power for AI Growth

In an unprecedented move, Microsoft has announced plans to purchase 100% of the power from Pennsylvania’s dormant Three Mile Island nuclear plant for the next 20 years. The plant, which was shut down in 2019, is set to be revived by 2028 under an agreement with Constellation Energy. If approved, the plant will produce enough energy to power 800,000 homes, meeting the rising electricity demands of Microsoft’s AI data centers.

A First in U.S. Nuclear History

This marks the first time a U.S. nuclear plant would be brought back into service after being decommissioned, and the first time a commercial nuclear plant’s entire output has been dedicated to a single customer. The decision is driven by the tech industry's need for stable, clean energy to support AI development while adhering to zero-emission commitments. The project will cost approximately $1.6 billion and relies on federal subsidies from the 2022 Inflation Reduction Act.

Economic and Regulatory Hurdles

Constellation Energy will need to clear significant regulatory reviews, including safety inspections from the Nuclear Regulator Commission, to get the plant running again. While some see the reopening as a boost to the local economy, others express concerns about nuclear safety and the exclusive allocation of the plant’s energy to a single company.

A study by the Pennsylvania Building & Construction Trades Council estimates that reopening Three Mile Island would create 3,400 jobs and generate $3 billion in state and federal taxes. The tax credits provided by the Inflation Recovery Act, which offer a credit for each megawatt hour of nuclear energy produced, are essential for making the project financially viable, according to Constellation. While Constellation did not disclose specifics about its contract with Microsoft or the value of tax credits, federal subsidies could potentially reduce the cost of reopening the plant by up to half.

A partial reactor meltdown at Three Mile Island in 1979 caused widespread panic and severely impacted the nuclear industry. The unit Constellation plans to restart is located next to the one that experienced the malfunction 45 years ago.

Nuclear Power’s Role in AI Growth

The deal reflects a broader trend of tech companies turning to nuclear power to meet their energy needs. As data centers expand, traditional power sources struggle to keep up. Nuclear energy, considered “clean” due to its low greenhouse gas emissions, offers a reliable alternative, though it comes with high costs and complex regulatory challenges.

Power Deals Under Scrutiny

The Microsoft deal comes after Amazon made an agreement with Talen Energy to purchase power from the financially struggling Susquehanna nuclear plant for a new data center campus in Pennsylvania. That plan has faced regulatory challenges, with concerns that regional utilities might pass grid upgrade costs onto ratepayers. Critics also worry that tech companies are monopolizing clean energy resources, limiting availability for others. Dominguez argues that reopening Three Mile Island could help balance the power grid for millions across the region, as plant’s energy won’t go directly to Microsoft facilities but will instead be fed into the heavily burdened PJM Interconnection, a regional power grid serving 65 million people across 13 states and the District of Columbia.

Dominguez stated that other ratepayers on the PJM grid won’t bear any costs, and Constellation will not seek additional subsidies from Pennsylvania. The company has already conducted extensive testing at Three Mile Island and reports that most components are operational. “The plant is in extraordinary shape,” Dominguez said.

Tech Industry Bets on Nuclear Power’s Future

Despite the high costs and regulatory challenges, the tech industry is increasingly investing in nuclear power. Once focused on plant closures, the sector is now exploring next-generation nuclear technologies, including small modular reactors and nuclear fusion. Companies like Terra Power are building small reactors in Wyoming, while Microsoft has signed a deal to purchase fusion energy by 2028. These advancements reflect the industry's shift toward innovative, sustainable energy solutions to meet growing demands.

Potential Impact

Reviving Three Mile Island could provide a model for repurposing decommissioned plants to support modern energy demands, especially as tech giants like Microsoft and Amazon continue to seek innovative solutions to power their expanding AI capabilities.