Three Mile Island to Restart Nuclear Reactor for Microsoft’s Carbon-Free Data Center Energy Supply

Constellation Energy, owner of the closed Three Mile Island nuclear power plant, has revealed plans to restart the reactor under a 20-year agreement with tech giant Microsoft. The agreement entails Microsoft purchasing the power to supply its data centers with carbon-free energy.

Background

This announcement comes five years after Exelon, Constellation's then-parent company, shut down the plant due to financial losses and Pennsylvania lawmakers' refusal to provide subsidies.

The decision to restart Three Mile Island's Unit 1 aligns with the growing acceptance of nuclear power as a viable solution to the challenges of climate change and the increasing power demand from data centers. The plant, located on the Susquehanna River just outside Harrisburg, was the site of the worst commercial nuclear accident in the U.S. in 1979.

Microsoft's Commitment to Carbon Neutrality

By purchasing power from Three Mile Island, Microsoft aims to fulfill its commitment to becoming "carbon negative" by 2030.

Plans for Restarting the Reactor

Constellation hopes to bring Unit 1 online in 2028, pending approval from the U.S. Nuclear Regulatory Commission and relevant state and local agencies. The restart will require an investment of $1.6 billion to restore essential equipment such as the turbine, generator, main power transformer, and cooling and control systems. Constellation has stated that it is not seeking any state or federal subsidies to assist with this endeavor.

Economic Viability and Challenges

Experts believe that Microsoft will likely pay above-market prices for the electricity derived from the nuclear plant, as it offers both carbon-neutral and reliable power. While restarting the plant is deemed feasible, challenges remain, particularly related to the condition of the components and systems after years of inactivity.

The announcement of the restart plan follows a trend of shutdowns among coal-fired and nuclear power plants due to competition from cheap natural gas. This has raised concerns about the potential for an electric reliability crisis in the U.S. Additionally, there is a rapidly growing demand for electricity from data centers operated by tech giants like Meta, Amazon, Microsoft, and Google, which are crucial for providing cloud computing and digital services, including artificial intelligence systems.

Growth in Electricity Demand

According to the U.S. Energy Information Administration, the growth in electricity demand is concentrated in states like Virginia and Texas, where large-scale data centers are being developed at a fast pace. Currently, data centers account for around 4% of the total electricity use in the U.S., with projections suggesting that this share may double by 2030.

Push for Reconsideration of Nuclear Power

The Constellation-Microsoft agreement comes at a time when there is a renewed push by the Biden administration, states, and utilities to reconsider the use of nuclear power as a means to reduce greenhouse gas emissions from the power sector. Last year marked a significant milestone with Georgia Power commencing electricity production from the first American nuclear reactor to be built in decades.

Capacity and Future Developments

Prior to its shutdown in 2019, Three Mile Island's Unit 1 had a generating capacity of 837 megawatts, sufficient to power over 800,000 homes. Constellation has not disclosed the terms of the agreement with Microsoft, but the economic viability of the partnership appears promising.

AI and Climate Targets

The late 2022 debut of OpenAI's ChatGPT, which relies on Microsoft’s data centers, ignited a surge in demand for chatbots and other generative AI products, necessitating substantial computing power. Both Google and Microsoft have acknowledged that the increased electricity needs from these AI applications pose challenges to achieving their ambitious climate targets.