Microsoft strikes US$3bn deal to source AI power from retired nuclear plant

MICROSOFT has struck a 20-year deal worth US$3bn with American energy company Constellation to source power from its retired nuclear plant in Pennsylvania, bringing it back online after a five-year shutdown.

Following its growing investment into AI infrastructure, Microsoft will purchase energy from Three Mile Island Unit 1 (TMI Unit 1), renamed the Crane Clean Energy Center, to support its data centre expansion.

Constellation says the station had to be “prematurely shuttered” due to poor economics, as the production of US nuclear power dwindled.

However, the renewed interest and cash injection from Microsoft will allow the plant to deliver around 835 MW of energy to the grid, centring it as a key player in the region’s burgeoning data centre portfolio.

Joe Dominguez, CEO of Constellation, said: “We look forward to bringing the plant back with a new name and a renewed mission to serve as an economic engine for Pennsylvania.”

The Pennsylvania-New Jersey-Maryland power pool is home to the largest concentration of data centres in the world, having a capacity of more than 4 GW in northern Virginia alone.

A complete 180

Before the deal, TMI Unit 1 was on the road to decommissioning, which was expected to be completed by 2079.

Nuclear power production has been on the decline in the US since 1998 due to the low cost of natural gas and limited growth in electricity demand, with only 92 nuclear plants still operating in 2022.

However, the need for low-carbon AI technologies has renewed interest in nuclear production, with the US Department of Energy projecting that nuclear capacity could triple by 2050.

Bobby Hollis, VP of energy at Microsoft, said: “This agreement is a major milestone in Microsoft’s efforts to help decarbonise the grid in support of our commitment to become carbon negative.”

Restarting the plant will still need to be approved by the US Nuclear Regulatory Committee, and Constellation is currently pursuing a licence renewal to extend the plant’s operations to at least 2054.

If the deal is approved, the company expects to have the nuclear plant online by 2028.