By: Julia Milani
Three Mile Island is the US’s best-kept nuclear secret. Located in central Pennsylvania, it houses two twin reactors, aptly named Unit 1 and Unit 2. At peak operation, each reactor produced over 800 megawatts of energy, and the facility employed around 675 people.
On March 28, 1979, Unit 2 melted down after there was a loss of coolant through a faulty valve. This was the most significant nuclear accident in United States history and the last time Unit 2 was active. Despite this, Unit 1 was shut down during this time due to repairs causing it to be preserved from the incident, allowing it to remain fully functional until 2019.
For nearly three decades, Unit 1 supported power to over 100,000 homes. However, it was ultimately shut down due to stiff competition in the energy sector from natural gas and other renewable energy sources. While being a clean way to produce electricity, it had high maintenance costs with low profits, leading to its closure.
In early 2024, Microsoft announced that it had reached a deal with Constellation Energy (the company that owns and previously ran Three Mile Island) to reopen Unit 1. It announced its plan to use the power it generated to offset the energy required to maintain its AI data centres as well as build new ones.
With a push towards AI innovation, it is taking more power to support new research and development. Earlier this year, Microsoft disclosed that their carbon emissions have grown almost a third since 2020, with other technology competitors showing similar growth in numbers. According to Goldman Sachs, power demand is expected to grow around 160% by 2030 with the rise of these new data centres.
After publicly announcing this deal, 57% of Pennsylvania residents that were polled supported the reopening. However, the plant will have to undergo serious renovations as well as new regulation checks. These upgrades and ongoing maintenance are projected to directly and indirectly create 3400 local jobs. Key components like the turbine, generator, main transformer, cooling system, and control system all need to be revamped or replaced, with a total refurbishment cost estimated at $1.6 billion.
Constellation Energy has publicly announced that all the repairs it plans to make will be entirely backed by the company and will not use taxpayer support. However, the company is applying for a Federal loan to finance the project. This loan would mitigate risk by transferring any potential default costs to the federal government while leveraging Constellation’s $80 billion net worth. By opting for a federal government instead of commercial financing, Constellation Energy will save approximately $122 million in borrowing expenses.
The federal government has grown supportive of nuclear energy, providing a loan of about $1.5 billion to Palisades Nuclear Plant in Michigan. There have also been discussions of a nuclear plant reopening in Duane, Iowa. Nuclear power seems to be the government’s solution for a carbon-free energy source. Constellation Energy is optimistic that the loan, currently in negotiations, will be finalised in their favour.
However, if the repairs don’t go well, it could have serious implications. Microsoft’s part of the deal hasn’t been fully formalised, meaning it’s almost wholly contingent upon the repairs being on time and within budget. While a spokesperson for Constellation Energy said they don’t expect the project to go over budget schedule, their last reactor restart happened seven years later than planned and $17 billion more than anticipated. When asked about this track record, the spokesperson stated the reason for the delay was because they were building a new reactor and not reopening an old one, adding that they do not expect Three Mile Island to follow the same delays.
Even if the reopening goes smoothly, the next problem lies with Microsoft itself. As it stands, the company has no current data centre near Three Mile Island and has no plans to build or acquire one nearby. Therefore, the power provided by the reactor of Unit 1 won’t directly power Microsoft’s facilities. Instead, the houses and other businesses in the 13 states and Washington DC, will be the ones benefiting from the reopening of Unit 1. On paper, Microsoft will use the energy output from Unit 1 to claim carbon offsets, presenting itself as a zero-emission company (if it produces the expected energy). This would allow them to benefit from tax credits; this approach raises concerns about the authenticity of their carbon-neutral claims.
While the reopening of Unit 1 at Three Mile Island presents promising potential for the future of energy and the climate, it’s important to remain cautious and avoid focusing solely on the benefits. Although nuclear energy is carbon-free, Microsoft’s operations are not, and their strategy could be seen as greenwashing. This doesn’t mean the project should be dismissed or that the partnership between Constellation Energy and Microsoft shouldn’t proceed. Rather, it suggests that the level of praise and the way we commend this deal should be approached with careful consideration.
The views expressed in this article are the author’s own, and may not reflect the opinions of The St Andrews Economist.
Image Courtesy of Mick Truyts via Unsplash