On Tuesday, the Trump administration revealed plans to grant Constellation Energy a $1 billion loan aimed at reviving a nuclear reactor at Three Mile Island.
Constellation announced last year that it would bring the reactor—closed since 2019—back online, following Microsoft’s agreement to purchase all of the plant’s 835 megawatt output for twenty years. The company projects the total cost at $1.6 billion and anticipates finishing the overhaul by 2028.
The specifics of Microsoft’s arrangement with Constellation have not been made public. However, Jefferies analysts estimate that Microsoft could be paying between $110 and $115 per megawatt-hour over the two-decade contract.
This rate is lower than the cost of building a new nuclear facility, but it remains significantly higher than the price of wind, solar, or geothermal energy, according to Lazard’s energy cost analysis. Even renewable projects equipped with large-scale batteries for continuous power are less expensive.
Despite this, technology firms have recently shown increased interest in nuclear energy as their data centers and AI operations require more electricity. Earlier this summer, Meta—Microsoft’s rival—also partnered with Constellation, purchasing the “clean energy attributes” from a 1.1 gigawatt nuclear plant in Illinois.
The Three Mile Island reactor being restarted is not the notorious Unit 2, which suffered a meltdown in 1979. Instead, it is Unit 1, which began operating in 1974 and was shut down in 2019 due to competition from inexpensive natural gas.
The loan is being issued through the Department of Energy’s Loan Programs Office (LPO), established by the Energy Policy Act of 2005 to promote clean energy innovation.
The LPO is perhaps best known for its loan to Solyndra, a U.S. solar company that collapsed during the Great Recession. Nonetheless, experts generally view the LPO as effective, with a post-recovery default rate of 3.3%. For example, Tesla secured a $465 million loan from the program in 2010 and repaid it by 2013.
Just last month, the LPO approved a $1.6 billion loan to American Electric Power, using federal funds to help modernize about 5,000 miles of transmission infrastructure.
The Inflation Reduction Act, enacted during the Biden administration, introduced a new funding stream within the LPO called the Energy Infrastructure Reinvestment program. This initiative was designed to bring existing power plants back into service, provided they cut down on pollutants or greenhouse gas emissions. The Trump administration largely preserved this program, renaming it the Energy Dominance Financing Program.
In its press statement, the Department of Energy, possibly in error, claimed the EDF Program was established under the Working Families Tax Cut Act. In reality, it was authorized by the One Big Beautiful Bill Act.
