trump doe gives microsoft partner $1b loan to restart three mile island reactor

Federal Loan Backs Three Mile Island Reactor Restart

A $1 billion loan has been approved by the Trump administration to facilitate the reopening of a nuclear reactor at Three Mile Island, as announced on Tuesday.

Constellation Energy's Plans

Constellation Energy revealed last year its intention to reactivate the reactor, which ceased operations in 2019. This decision followed a commitment from Microsoft to procure all electricity generated by the 835-megawatt facility for a period of two decades.

The total project cost is estimated by Constellation to be $1.6 billion, with completion of the refurbishment anticipated by 2028.

Microsoft's Power Purchase Agreement

The specific details of Microsoft’s agreement with Constellation have not been publicly disclosed. However, analysts at Jefferies suggest the tech giant may be paying approximately $110 to $115 per megawatt-hour over the 20-year duration of the contract.

While this cost is lower than constructing a new nuclear power plant, it represents a significant increase compared to the expenses associated with wind, solar, and geothermal energy sources, as indicated by a cost comparison from Lazard.

Even energy projects utilizing wind and solar power, coupled with utility-scale battery storage for continuous power delivery, are more cost-effective.

Growing Tech Interest in Nuclear Power

Despite the cost, technology companies are increasingly turning to nuclear energy to meet the escalating power demands of their data centers and artificial intelligence initiatives. This past summer, Meta, a competitor to Microsoft, entered into a similar agreement with Constellation, securing the “clean energy attributes” from a 1.1 gigawatt nuclear power plant located in Illinois.

Clarification Regarding the Three Mile Island Reactor

It’s important to note that the reactor undergoing restart at Three Mile Island is Unit 1, commissioned in 1974 and decommissioned in 2019 due to economic factors related to inexpensive natural gas. This is distinct from Unit 2, which experienced a partial meltdown in 1979.

Department of Energy Loan Programs Office

The funding is being provided through the Department of Energy’s Loan Programs Office (LPO), established under the Energy Policy Act of 2005 to promote the development of clean energy technologies.

LPO's Track Record

The LPO gained notoriety for its loan to Solyndra, a solar startup that failed during the Great Recession. However, experts generally view the LPO as successful, citing a 3.3% default rate after accounting for recoveries.

Tesla, for example, received a $465 million loan through the program in 2010 and fully repaid it by 2013.

Recent LPO Activity

Just last month, the LPO finalized a $1.6 billion loan to American Electric Power, utilizing federal funds to modernize approximately 5,000 miles of transmission lines.

Inflation Reduction Act and Program Evolution

The Inflation Reduction Act, enacted during the Biden administration, introduced an additional funding stream under the LPO, known as the Energy Infrastructure Reinvestment program. This program aims to restore existing power plants to operational status, provided they reduce or avoid pollutants and greenhouse gas emissions.

The Trump administration maintained this program, though it was rebranded as the Energy Dominance Financing Program.

Department of Energy Statement

The Department of Energy’s press release contains a potential inaccuracy, stating the EDF Program was created under the Working Families Tax Cut Act. The program was, in fact, authorized by the One Big Beautiful Bill Act.