Nuclear is Back: Why Tech Giants Are Funding a Power Source Once Considered Past Its Prime
Microsoft is willing to pay a premium for clean energy, and that premium is driving a billion-dollar bet on restarting a shuttered nuclear plant at Three Mile Island. This isn’t a nostalgic return to the past, but a calculated move signaling a dramatic shift in how tech companies are securing their energy future – and it’s a trend that’s poised to reshape the energy landscape.
The Three Mile Island Revival: A Deal Driven by Data
The Trump administration’s recent $1 billion loan commitment to Constellation Energy to reopen the Three Mile Island Unit 1 reactor is a pivotal moment. The plant, offline since 2019, will now power the insatiable energy demands of Microsoft’s data centers and, increasingly, its artificial intelligence initiatives. Constellation estimates a $1.6 billion price tag for the refurbishment, with completion expected by 2028. While the exact terms of Microsoft’s 20-year power purchase agreement remain undisclosed, analysts at Jefferies suggest a cost of $110-$115 per megawatt-hour.
This price point is higher than current wind, solar, or geothermal energy costs, even when renewables are paired with battery storage, according to Lazard’s Levelized Cost of Energy Analysis. However, the certainty and reliability of nuclear power – its ability to provide baseload power 24/7 – are proving increasingly valuable to companies like Microsoft and Meta, who can’t afford disruptions to their always-on operations.
The AI Energy Boom: A New Demand Profile
The surge in demand for energy isn’t simply about growth; it’s about the *type* of demand. AI workloads are particularly energy-intensive. Training large language models, for example, requires massive computational power, and therefore, massive amounts of electricity. This has led to a scramble for reliable, clean energy sources, and nuclear is emerging as a surprisingly attractive option. Meta’s recent agreement with Constellation to purchase “clean energy attributes” from a 1.1 gigawatt Illinois nuclear plant further underscores this trend.
The Department of Energy’s Loan Programs Office: A History of Risk and Reward
The funding for Three Mile Island comes from the Department of Energy’s (DOE) Loan Programs Office (LPO), established in 2005 to support innovative energy technologies. The LPO has a checkered past, most notably its loan to solar startup Cylindera, which failed during the 2008 financial crisis. However, its overall track record is surprisingly strong, with a recovery rate bringing the net default rate down to 3.3%. Tesla successfully repaid a $465 million LPO loan in 2013, demonstrating the program’s potential for success.
More recently, the LPO approved a $1.6 billion loan for American Electric Power to upgrade transmission lines, highlighting a broader focus on grid modernization. The Inflation Reduction Act further bolstered the LPO with the Energy Infrastructure Reinvestment program (originally conceived under a different name – a point of minor bureaucratic confusion, as the DOE’s press release initially misattributed its origins).
Beyond New Builds: Repowering Existing Nuclear Capacity
The Three Mile Island project isn’t about building a new nuclear plant, which would be far more expensive and time-consuming. It’s about revitalizing existing infrastructure. This approach – repowering and extending the life of current nuclear facilities – is likely to be a key focus of future LPO funding. It offers a faster, more cost-effective path to increasing nuclear energy capacity and meeting the growing demands of a data-driven world.
What’s Next for Nuclear Energy?
The revival of Three Mile Island isn’t an isolated incident. It’s a harbinger of a broader trend: a reassessment of nuclear power’s role in a clean energy future. Expect to see more tech companies forging direct power purchase agreements with nuclear operators, and increased investment in extending the lifespan of existing reactors. The LPO will likely play a crucial role in facilitating these projects, providing the financial backing needed to overcome the initial capital hurdles. The future of nuclear may not be about building massive new plants, but about intelligently leveraging and upgrading the infrastructure we already have to power the next generation of technology.
What role do you see advanced nuclear technologies, like small modular reactors (SMRs), playing in this evolving energy landscape? Share your thoughts in the comments below!
