The owner of the shuttered Three Mile Island nuclear plant has been awarded a $1 billion federal loan guarantee that will enable it to shift onto taxpayers some of the risk of its plan to restart the Pennsylvania facility and sell the electricity to Microsoft for its data centers.
Amid rising energy demands, the taxpayer-backed loan will go toward the unprecedented effort to reopen a mothballed U.S. nuclear plant that suffered a partial meltdown decades ago.
The terms involve the federal government pledging to cover up to $1 billion if there is a default. The guarantees are typically used by developers to lower the cost of project financing, as lenders are willing to offer more favorable terms when there is federal backing.
But such incentives also raise thorny questions about who should shoulder the financial risk that comes with generating energy for wealthy tech companies. Critics say that such efforts should not be subsidized by taxpayers and that big nuclear projects are particularly risky because they are often plagued by huge cost overruns and delays. Constellation, the plant’s operator, has argued that there is no risk of a taxpayer bailout and that in the event of a default the company would be on the hook for using other assets to make the federal government whole.
The company says it has little concern about cost overruns because it is not building a new plant and is merely refurbishing a facility that is in relatively good working order.
Constellation has stated repeatedly that the restart of the plant — which was the site of the worst nuclear accident in the United States — is meant to provide power to Microsoft. But Energy Secretary Chris Wright did not mention Microsoft in the loan guarantee announcement.
“Constellation’s restart of a nuclear power plant in Pennsylvania will provide affordable, reliable, and secure energy to Americans across the Mid-Atlantic region,” Wright said in a statement. “It will also help ensure America has the energy it needs to grow its domestic manufacturing base and win the AI race.”
Under the agreement with Constellation, Microsoft will purchase all the energy the plant sends to the regional power grid. The tech company is expected to pay a premium for that low-emissions nuclear power.
The Three Mile Island reactor that would be restarted is not the one that partially melted down in 1979. It was shuttered in 2019, according to the Energy Department, but was never fully decommissioned. The company plans to restart it by 2028. It would provide 835 megawatts of electricity, roughly the equivalent it takes to power 800,000 homes.
Constellation has renamed the plant the Crane Clean Energy Center.
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