(Reuters) -Constellation Energy and Microsoft have signed a data-center power deal that will enable the restart of one of the units at the U.S. utility’s Three Mile Island nuclear plant in Pennsylvania, the companies said on Friday.
This would be the first ever restart of a nuclear power plant in the U.S. after shutting, and shows how utilities are benefiting from a massive surge in demand from data-center operators looking to ride a boom in artificial intelligence.
Constellation’s shares were up 13% in early trading.
The deal would enable a revival of Unit 1 of the five-decades-old facility in Pennsylvania that was retired in 2019 due to operational reasons. Unit 2, which was shut after a partial meltdown in 1979 – the most famous commercial nuclear accident in U.S. history – will not be restarted.
Constellation, which plans to spend about $1.6 billion to renew the plant, is awaiting permits and expects the facility to come online by 2028.
Reuters first reported on the potential restart in July.
Under the 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 energy to the tech giant.
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.
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.
Nuclear plants generated about 18.6% of the total electricity in the U.S. last year, according to Energy Information Administration data.
The power supply deals with A.I. data centers are also facing increased scrutiny. A similar deal between Talen Energy and Amazon signed earlier this year has been challenged by a group of electric utilities alleging it could spike costs for customers or hamper grid reliability.
Financial details of the Microsoft-Constellation deal were not disclosed. The companies declined to give more details on the agreement.
(Reporting by Mrinalika Roy and Sourasis Bose in Bengaluru; Editing by Janane Venkatraman and Sriraj Kalluvila)
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