The Trump administration announced Tuesday that it will provide a $1 billion loan to Constellation Energy to restart the nuclear reactor at Three Mile Island.
The energy company said last year it would reopen the reactor, which had been closed since 2019, following a commitment by Microsoft to buy all the electricity from the 835-megawatt power plant for two decades. The planetarium estimates the project will cost $1.6 billion, and expects to complete renovations in 2028.
Terms of Microsoft’s deal with Constellation were not disclosed. Jefferies analysts estimate the tech company could pay about $110 to $115 per megawatt-hour over the 20 years of the deal.
That’s cheaper than the cost of a brand-new nuclear power plant, but it’s a huge premium over wind, solar and geothermal, according to Lazard’s energy cost comparison. Even wind and solar projects equipped with utility-scale batteries to enable 24/7 power are affordable.
Nonetheless, tech companies have recently fallen in love with nuclear power as demand for electricity for their data centers and AI efforts has skyrocketed. This summer, Microsoft’s competitor Meta signed its own deal with Constellation to buy the “clean energy features” of a 1.1 gigawatt nuclear power plant in Illinois.
The reactor being restarted at Three Mile Island is not the infamous Unit 2, which melted down in 1979. Rather, it is Unit 1, which was commissioned in 1974 and taken offline in 2019 as cheap natural gas eroded its profitability.
The loan facility is being created through the Loan Program Office (LPO) of the Department of Energy, which was created under the Energy Policy Act of 2005 to promote the development of clean energy technologies.
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The LPO is most famous for the loan it made to Solyndra, an American solar startup that went under during the Great Recession. Overall, however, experts consider LPOs a success, with the default rate following the recovery being 3.3%. For example, Tesla received a $465 million loan under the program in 2010 and repaid it by 2013.
Last month, LPO finalized a $1.6 billion loan to American Electric Power, using federal dollars to support the upgrade of nearly 5,000 miles of transmission lines.
The Inflation Reduction Act, passed during the Biden administration, created another source of funding under the LPO, known as the Energy Infrastructure Reinvestment Program. That program was designed to restore existing power plants to operation, provided they avoid or reduce pollutants or greenhouse gas emissions. The Trump administration largely retained it and renamed it the Energy Dominance Financing Program.
In its press release, the Department of Energy, perhaps erroneously, says that the EDF program was created under the Working Families Tax Cut Act. Instead it was authorized under the One Big Beautiful Bill Act.