The Trump administration announced Tuesday it would provide Constellation Energy with a $1 billion loan to restart the Three Mile Island nuclear reactor.
The energy company announced last year that it would restart the reactor, which had been shut down since 2019, after Microsoft pledged to buy all the power from the 835-megawatt plant over 20 years. Constellation estimates the project will cost $1.6 billion, with renovations expected to be completed in 2028.
Terms of the agreement between Microsoft and Constellation were not disclosed. Jefferies analysts estimate that the tech company could pay about $110 to $115 per megawatt hour over the 20-year term of the contract.
That's less than the cost of a brand new nuclear power plant, but significantly more expensive than wind, solar or geothermal, according to Lazard's Energy Cost Comparison. Wind and solar projects equipped with utility-scale batteries to provide 24/7 power are also cheaper.
Nevertheless, tech companies have been hooked on nuclear power lately as demand for electricity for data centers and AI efforts has skyrocketed. This summer, Microsoft competitor Meta Inc. struck a deal of its own with Constellation Corp. to buy the “clean energy attributes” of a 1.1 gigawatt nuclear power plant in Illinois.
The Three Mile Island reactor being restarted is not the infamous No. 2 reactor that melted down in 1979. Rather, it is Unit 1, which began operation in 1974 and was shut down in 2019 after cheap natural gas undermined profitability.
This debt facility is provided through the Department of Energy's Loan Programs Office (LPO), which was established under the Energy Policy Act of 2005 to promote the growth of clean energy technologies.
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The LPO is best known for lending to Solyndra, a U.S. solar startup that went bankrupt during the Great Recession. But overall, experts believe the LPO was a success, with a post-recovery default rate of 3.3%. Tesla, for example, received a $465 million loan under the program in 2010, which was repaid by 2013.
Last month, LPO closed on a $1.6 billion loan to American Electric Power that leveraged federal funds to help upgrade nearly 5,000 miles of transmission lines.
The Inflation Control Act passed under the Biden administration created new funding under the LPO, known as the Energy Infrastructure Reinvestment Program. The program was created to bring existing power plants back into operation, provided they avoid or reduce emissions of pollutants and greenhouse gases. The Trump administration kept the program largely intact and renamed it the Energy Dominance Loan Program.
The Department of Energy stated in a press release, perhaps incorrectly, that the EDF program was created under the Working Families Tax Relief Act. Instead, it was authorized under the One Big Beautiful Bill Act.