The Trump administration announced Tuesday it would provide Constellation Energy with a $1 billion loan to restart a nuclear reactor at Three Mile Island.
The energy company said last year it would reopen the reactor, which had been shuttered since 2019, after Microsoft committed to purchasing all the electricity from the 835 megawatt power plant for two decades. Constellation estimated the project would cost $1.6 billion, and it expects to complete the refurbishment in 2028.
Terms of Microsoft’s deal with Constellation weren’t disclosed. Analysts at Jefferies have estimated the tech company might be paying about $110 to $115 per megawatt-hour over 20 years of the deal.
That’s cheaper than a brand-new nuclear power plant would cost, but it’s a hefty premium over wind, solar, and geothermal, according to a comparison of energy costs from Lazard. Even wind and solar projects outfitted with utility-scale batteries to enable 24/7 power are cheaper.
Nonetheless, tech companies have recently fallen in love with nuclear as power demands for their data centers and AI efforts have skyrocketed. This summer, Microsoft competitor Meta signed its own deal with Constellation, buying the “clean energy attributes” of a 1.1 gigawatt nuclear power plant in Illinois.
The reactor at Three Mile Island that’s being restarted isn’t the infamous Unit 2, which melted down in 1979. Rather, it’s Unit 1, which was commissioned in 1974 and taken offline in 2019 as cheap natural gas eroded its profitability.
The debt facility is being made through the Department of Energy’s Loan Programs Office (LPO), which was formed under the Energy Policy Act of 2005 to foster the growth of clean energy technologies.
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The LPO is most famous for its loan to Solyndra, a U.S. solar startup that went belly-up during the Great Recession. Overall, though, experts consider the LPO a success, with a default rate of 3.3% after recoveries. Tesla, for instance, received a $465 million loan under the program in 2010 and paid it back by 2013.
Last month, the LPO finalized a $1.6 billion loan to American Electric Power, using federal dollars to support the upgrade of around 5,000 miles of transmission lines.
The Inflation Reduction Act, which passed during the Biden administration, created another pot of money under the LPO known as the Energy Infrastructure Reinvestment program. That program was created to restore existing power plants to operation provided they avoid or reduce pollutants or greenhouse gas emissions. The Trump administration kept it largely in tact, rebranding it the Energy Dominance Financing Program.
In its press release, the Department of Energy, perhaps erroneously, says the the EDF Program was created under the Working Families Tax Cut Act. It was instead authorized under the One Big Beautiful Bill Act.
