Three Mile Island’s nuclear plant to reopen, help power Microsoft’s AI centers

Under the agreement, Constellation would revive the plant’s undamaged reactor, which was too costly to run and closed in 2019, and sell the power to Microsoft. The plan signals the gargantuan amount of power needed for data centers for AI, along with the tech industry’s thirst for a carbon-free, round-the-clock electricity source needed to meet climate goals.

Constellation expects to spend around $1.6 billion to restart the reactor by early 2028. Microsoft has signed a 20-year power-purchase agreement with Constellation, the companies said Friday. The deal would help Microsoft pair its 24-7 electricity use with a matching source of nearby clean power generation.

“The most important energy commodity in the world today is a reliable and clean electric megawatt just because of the difficulty of replicating it and the need for it," Joe Dominguez, Constellation’s chief executive officer, said in an interview.

Bobby Hollis, vice president of energy for Microsoft, called the agreement “a major milestone in Microsoft’s efforts to help decarbonize the grid."

Three Mile Island’s undamaged Unit 1 reactor sits next to Unit 2, which was shut down after a partial core meltdown in 1979 led to five days of panic. The incident heightened awareness of nuclear plants’ potential safety problems and contributed to a loss of enthusiasm for the industry that lasted decades.

But the 835-megawatt Unit 1 continued operating and closed only under economic pressure five years ago. Dominguez said despite losing money for years it was “the best-performing reactor in our fleet and arguably the best-performing reactor in America."

Years of flat U.S. power demand had created a bruising battle for market share. Nuclear plants had a tough time competing against renewable energy and natural-gas-fired plants that tapped into a cheap source of fuel from the U.S. shale boom.

That landscape has reversed.

Forecasts for power demand have zoomed higher with more data centers, new domestic manufacturing and a push to electric power for transportation, heat and heavy industry. Tech companies scouring the country for carbon-free electricity have zeroed in on America’s nuclear-power plants. Microsoft already purchases nuclear energy from Constellation for a data center in Virginia when wind and solar power aren’t available, and signed a first-of-its-kind contract for fusion energy, betting it might be delivered this decade.

Nuclear power advocates see a window of opportunity to halt or unwind the closure of existing plants, or to add small modular reactors, newer designs that many consider the best option for fresh projects. New tax credits, potential support for financially strapped plants or loans for new projects have become available through federal legislation.

Critics question whether reactors that began operating decades ago can safely come back online. After Constellation said earlier this year that it was examining reopening Three Mile Island, there were small local protests.

The reactor had a federal license to operate until 2034 when it closed, but a restart will require safety and environmental reviews, local and state permits, and approval by the U.S. Nuclear Regulatory Commission. Separately, Constellation will pursue license renewal to extend plant operations to at least 2054.

This is the second U.S. attempt to revive a closed nuclear reactor. The federal government and the state of Michigan are spending nearly $2 billion to restart the Palisades nuclear reactor on the shores of Lake Michigan. That plant was mothballed in 2022, with reopening targeted for October 2025.

In Iowa, NextEra Energy is considering reopening the Duane Arnold Energy Center, a nuclear plant that closed in 2020.

A Three Mile Island restart, along with potential investments at other reactors that could boost nuclear power output, called uprating, means Constellation could add around 2,000 megawatts of nuclear power within “a handful of years," Dominguez said. Electricity use varies by region, but that is roughly enough to power more than 1.5 million homes.

It is also nearly as much power as what is produced by two new reactors at Georgia’s Vogtle plant, the first new nuclear project completed in years in the U.S. Vogtle faced years of delays and cost more than $30 billion, souring the appetite for new conventional reactors.

“Things that we build are going to just take a lot longer and we have this need now," Dominguez said.

Microsoft has begun testing whether AI could help streamline the notoriously challenging regulatory approval process.

Constellation has already ordered some equipment, including the main transformer for the plant, which needs to be replaced, and U.S.-sourced nuclear fuel.

Three Mile Island will be renamed the Crane Clean Energy Center after former Exelon CEO Chris Crane, who died in April at age 65. Crane was a proponent of nuclear energy and oversaw the spinout of Constellation from Exelon in 2022 before retiring.

Constellation produces more than a fifth of the country’s nuclear power.

Write to Jennifer Hiller at jennifer.hiller@wsj.com