Three Mile Island Reactor Gets a $1 Billion Government Lifeline
Tyler Durden

One week ago we said that "hundreds of billions" of dollars are about to be loaned out to nuclear projects by the US government. Well, the first billion is about to be wired. 

The Wall Street Journal reports Constellation Energy has secured a $1 billion federal loan from the Energy Department's Loan Programs Office (LPO) to restart the Unit 1 reactor at the Three Mile Island reactor plant in Pennsylvania, recently renamed the Crane Clean Energy Center. Constellation has said it would pay about $1.6 billion to restart the plant in 2027. 

CEG stock shot up 5% after hours on the news.

The plant's Unit 2 reactor infamously suffered a partial meltdown in the 1970s, but Unit 1 continued to operate without issue for decades until it was shut down in 2019. The reactor was shuttered due to its inability to compete economically with cheap natural gas, as the company notes “before it was prematurely shuttered due to poor economics, this plant was among the safest and most reliable nuclear plants on the grid”.

Constellation announced the intention to restart Unit 1 after Microsoft signed a $16 billion, 20-year offtake agreement in an effort to secure a carbon-free source of reliable energy for their data centers.

Energy Secretary Chris Wright said Three Mile Island will add around 800 megawatts of power generation to the grid. Wright added that “constellation’s restart of a nuclear power plant in Pennsylvania will provide affordable, reliable, and secure energy to Americans across the Mid-Atlantic region. It will also help ensure America has the energy it needs to grow its domestic manufacturing base and win the AI race.”

WSJ notes “the deal calls for Constellation to revive the plant’s undamaged reactor, which was too costly to run and closed in 2019. The power generated will be sold to Microsoft under a 20-year deal. The tech industry has a nearly insatiable demand for 24-hour-a-day power for AI data centers.”

The 835 MW reactor produces enough power for approximately 800,000 homes and will provide reliable and affordable baseload power to the PJM Interconnection region. Along with clean energy, the project will strengthen grid reliability and create over 600 jobs.

Thomas Hochman, Director of Energy & Infrastructure Policy with the Foundation for American Innovation, notes multiple important points with the latest closed LPO deal, in particular that it’s “it’s really the first LPO loan to tackle the issue of AI-driven load growth”.

He also said that it's a novel construct between a technology firm and an energy developer and represents the tech sector's continued move into the infrastructure space.Importantly, he added that this is “not a behind-the-meter deal. The electrons from Three Mile Island will flow directly into PJM, benefitting ratepayers and adding extra reserve margin to the grid.”

As for today's loan, it's just the first of many in a space we expect to see a flood of capital...

... as the US scrambles to catch up to China's massive nuclear head start.

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