Microsoft revives shuttered nuclear plant in controversial plan to power data centers

Microsoft kicks off a controversial years-long plan to revive the infamous Three Mile Island nuclear plant in Pennsylvania – the site of a 1979 nuclear meltdown – all to offset its power-hungry data centers.

The effort to restore Unit 1 at Three Mile Island is expected to take four years, at least $1.6 billion, and thousands of workers to complete the unprecedented task of restarting a retired nuclear plant.

Constellation Energy, which operates the largest fleet of nuclear plants in the US, has already ordered costly equipment for the site and identified fuel for the unit's reactor core, with work expected to start early next year, according to Reuters' interviews with company executives, contractors and a tour of the site.

Successfully resurrecting Three Mile Island – widely known for a 1979 partial meltdown that cast a pall over the US nuclear sector for decades, would put the plant at the forefront of an industry revival.

A cooling malfunction caused part of the core to melt in one of the two reactors on the site. The accident was said to be caused by a combination of "equipment malfunctions, design-related problems, and worker errors," the US Nuclear Regulatory Commission website states.

"Some radioactive gas was released but not enough to cause adverse health effects, as noted in numerous health studies," according to the Idaho National Laboratory, with 99% of the radioactive fuel removed after the accident.

Nuclear creates large amounts of carbon-free electricity, attractive to companies like Microsoft, which already have climate pledges and face increasing public scrutiny for their voracious power use.

Relaunching Three Mile Island would supply to the regional grid 835 megawatts of electricity - enough for all of Philadelphia's homes - to help offset Microsoft's power consumption.

Constellation announced last month that it would revive the half-century-old Three Mile Island with the purpose of fueling Microsoft's data centers.

Microsoft is expected to pay at least $100 a megawatt-hour, nearly double the typical cost of renewable energy in the region, as part of the 20-year power contract.

Big Tech tackles power demands

The agreement shows the dramatic lengths Big Tech is willing to go to procure electricity for its artificial intelligence expansion and the undertaking by the US. power industry to meet that demand.

In the first half of 2024, North America saw a 70% increase in data center construction due to the rapid development of AI and the demand for cloud services, leading to the increased demand for the electricity needed to power them.

OpenAI CEO and co-founder Sam Altman has stressed the need for energy breakthroughs to support the enormous amounts of power needed to sustain future data consumption.

Altman pushed the ideas of nuclear fusion (and solar power) as a climate friendly alternative to electric power at the World Economic Forum in January.

Microsoft would consider signing other power purchase agreements to restart shut plants, Alistair Speirs, senior director of Microsoft's Azure Global Infrastructure, told Reuters. "I don't think anything's off the table," Speirs said.

Giant cooling towers at Constellation Energy's Three Mile Island nuclear plant in Pennsylvania have sat dormant for so long that grass has sprung up in the towers' hollowed-out bases and wildlife roams inside.

Armed guard stations at an entrance to the shut concrete facility, surrounded by barbed wire, sit empty. The plant, which would run so loud when operating that workers were required to wear hearing protection, is nearly silent.

"It's still eerie walking in here and it's, just, quiet," Constellation regulatory assurance manager Craig Smith said during a tour of the plant last week. Smith, who worked at Three Mile Island when Constellation shut the site’s remaining reactor in 2019, is now preparing for a restart.

A restart of the plant, however, is not certain. Three Mile Island, which will be renamed the Crane Clean Energy Complex, still requires licensing modifications and permitting.

Environmental Concerns

Still, not everyone is enthused about the prospect of a nuclear comeback.

The power plants produce waste that can remain radioactive for thousands of years. About a tennis court-size amount of spent nuclear fuel from Unit 1 is stored on Three Mile Island, which sits on a strip of land in the Susquehanna River.

The decommissioning of Unit 2 is still underway about 45 years after the partial meltdown.

Local activist Eric Epstein, who remembers the March 1979 incident, said he will fight Constellation's request to resume operating and water use licenses.

"It's going to be a protracted battle," Epstein said.

The first chance for the challenges comes on Oct. 25, when the Nuclear Regulatory Commission has scheduled its initial public hearing on Constellation's plan to restart Unit 1.

If the plan suffers the same lengthy delays and cost overruns that have plagued nearly every nuclear build in the country's history, it could stymie other deals and set back Big Tech's quest to rapidly expand, power experts say.

Local activists have also vowed to fight the project over safety and environmental concerns.

Responding to pushback by environmentalists over increased energy consumption and data center builds, Microsoft launched a Datacenter Community Pledge in June, which promised the company would become carbon-negative, water-positive, and zero waste by 2030.

The pledge also said it would deliver 'significant' economic, social, and environmental benefits to local communities where it plans to break ground.

Still, a September report by The Guardian showed emissions from data centers owned by Big Tech companies – including Microsoft – were 662% higher than officially claimed.

Millions of Feet of Building

Earlier this year, Constellation finished initial testing of the plant's Unit 1 to determine whether it was financially reasonable to resurrect it.

After learning that the central generator, which would cost hundreds of millions of dollars to replace, was in strong condition, the company moved ahead with its plan.

“We have a perfectly ready-to-go main generator just waiting for the rest of the plant to get started,” said Smith, standing in front of a row of massive turbines.

About a thousand carpenters, electricians, pipefitters and other tradesmen are expected to be deployed to the site, said Rob Bair, president of Pennsylvania Building Trades.

Work will likely start in the first quarter of 2025 with restoring two 370-foot (113-m) high cooling towers, which were stripped bare after the plant shut.

"There is a ton of equipment that has to go back in those towers," said Bair, whose father helped build Unit 1, which opened in 1974.

Workers will be hoisted up the top of the towers to install lighting and restock the buildings from within. The structures' bases, which were once made of redwood, will be refurbished with modern materials.

Next, restorations inside of the plant will begin: some major equipment will be replaced. Constellation recently ordered the site's main transformer, which is expected to cost around $100 million including installation, to be delivered in 2027.

Piping and electrical work, scrubbing condensers and cleaning out power generators, will be among the next tasks. A million-gallon tank will be filled with water.

Much of the analog control room, with a panel installed in the early 1970s, will stay the same. A benefit of keeping the analog system is that it would be more secure against cyberattacks, officials said.

Completing the job will require several million feet of scaffolding, built by scaffologists, or carpenters with special licenses, to be assembled repeatedly around the island.

"And all of that has to be done before you can even put fuel on the site," Bair said.

The effort is part of a recent turnaround of US nuclear power, which suffered from competition from cheap fuel and fears of meltdowns, said John Ciampaglia, CEO of Sprott Asset Management, which manages a large physical uranium fund.

The company has commissioned the fuel design for the reactor's core, said Constellation Chief Generation Officer Bryan Hanson.

The core holds the enriched uranium, the fuel source for the plant, stacked in pellets and sealed in tubes. Constellation will tap into fuel from its existing enriched uranium reserves as one of the final steps before starting up.

In Michigan, Holtec is in the process of trying to restart another reactor site.

Constellation's stock price has soared by 135% so far this year amid fresh projections for record U.S. power consumption next year and a doubling of data center demand by 2030.