Constellation Energy, the utility company that owns Pennsylvania's Three Mile Island nuclear plant, is expected to seek a $1.6 billion federal loan guarantee for its project to restart a reactor that would provide power to Microsoft for a new artificial intelligence data center.
The Baltimore-based energy company submitted an application to the U.S. Department of Energy for the taxpayer-backed loan in May, the Washington Post reported Thursday. Constellation revealed its plans with Microsoft in September after signaling public interest in restarting one of the plant's reactors in July.
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Three Mile Island, located outside Harrisburg along the Susquehanna River, is the site of the worst nuclear accident in U.S. history. One of its two reactors had a partial meltdown in March 1979, forcing thousands of people in surrounding communities to evacuate over fears of exposure to radioactive fallout. The other reactor remained active until 2019, providing power to more than 800,000 homes until it was shut down because it could no longer compete with cheaper energy sources.
Constellation plans to reopen the reactor it shut down as part of a 20-year power purchasing agreement with Microsoft, which is one of many technology companies seeking carbon-free energy to meet the enormous electricity needs of data centers dedicated to AI development. Not only would the project be one of the first in the country to restart a nuclear power plant, but it would be completed next to the reactor that's in the midst of a decades-long decommissioning under a separate owner.
If Constellation received a federal loan guarantee, much of the risk attached to the project would be shifted to taxpayers in the event of a default. It also would reduce the borrowing costs needed to finance to the restart. The project still needs to obtain regulatory approvals to move forward and would require intensive safety oversight during and after the restart.
In a statement to the Post, Constellation pushed back against the idea that a loan guarantee would put taxpayers on the hook in the event the project fails.
"Rest assured that to the extent we may seek a loan, Constellation will guarantee full repayment," the company's statement said. "Any notion that taxpayers are taking on risk here is fanciful given that any loan will be backstopped by Constellation's entire $80-billion-plus value."
Earlier this week, the Department of Energy firmed up its commitment of a $1.5 billion loan guarantee for Holtec International to restart Michigan's Palisades nuclear plant, which was closed in 2022. The federal government has renewed interest in building the nation's nuclear energy capacity to offset greenhouse gas emissions and strengthen domestic energy production. The Palisades project is targeted for completion in 2025 with the goal of powering about 800,000 homes in rural communities.
The project proposed at Three Mile Island differs in that it's intended to support the electricity needs of a private company. Energy produced by the reactor would serve the broader power grid — which covers 13 states and Washington, D.C. — but Microsoft would purchase the clean energy it produces to offset other fuel sources that provide electricity to its data centers. Constellation also would be able to obtain additional federal tax credits to support restarting the reactor.
Due to the age of the plant, some experts have cautioned that the project may require significant investments in refurbishments and maintenance beyond the period of the restart.
"The $1.6 billion is just the start," Mark Jacobson, a professor of civil and environmental engineering at Stanford University, told the New Republic. "Microsoft will be asking for government handouts just like most all other aged nuclear reactor owners have asked in multiple states."
Constellation has set an ambitious target to have the reactor at Three Mile Island operational by 2028, if not earlier. Given the technical challenges of the project and the heightened risks posed by the other reactor, the possibility of setbacks could make the plan more of a financial gamble.
In September, Pennsylvania Gov. Josh Shapiro touted thousands of energy jobs that will be created by Constellation's plans at Three Mile Island. Constellation, which plans to rename the facility the Crane Clean Energy Center, has claimed it will generate about $3 billion in state and federal tax revenue.