The US Department of Energy gives Microsoft partner a $1 billion loan to restart the Three Mile Island reactor

The Trump administration announced Tuesday that it will provide Constellation Energy with a $1 billion loan to restart a nuclear reactor on Three Mile Island.

The energy company said last year that it would reopen the reactor, which has been closed since 2019, after Microsoft pledged to buy all the electricity from the 835-megawatt power plant for two decades. Constellation estimated that the project would cost $1.6 billion, and expects to complete the renovation in 2028.

Terms of Microsoft’s deal with Constellation were not disclosed. Analysts at Jefferies estimated the technology company could pay about $110 to $115 per megawatt hour over the 20 years of the deal.

That’s cheaper than the cost of building a new nuclear power plant, but represents a significant premium over wind, solar and geothermal power, according to Lazard’s energy cost comparison. Even wind and solar projects equipped with large-scale batteries to enable 24/7 power are cheaper.

However, technology companies have recently fallen in love with nuclear power as power demand for their data centers and artificial intelligence efforts has skyrocketed. This summer, Microsoft rival Meta signed its own deal with Constellation, purchasing the “clean energy properties” of a 1.1-gigawatt nuclear power plant in Illinois.

The reactor being restarted at Three Mile Island is not the infamous Unit 2, which melted down in 1979. Rather, it is Unit 1, which was commissioned in 1974 and decommissioned in 2019 as cheap natural gas eroded its profitability.

The debt facilities are provided through the Department of Energy’s Office of Loan Programs, which was formed under the Energy Policy Act of 2005 to promote the growth of clean energy technologies.

The LPO is best known for its loan to Solyndra, an American solar startup that went bankrupt during the Great Recession. Overall, though, experts consider the LPO a success, with a default rate of 3.3% after recovery. For example, Tesla received a $465 million loan under the program in 2010 and repaid it by 2013.

Last month, LPO finalized a $1.6 billion loan to American Electric Power, using federal dollars to support the upgrade of about 5,000 miles of transmission lines.

The Inflation Reduction Act, passed during the Biden administration, created another pot of money under the LPO known as the Energy Infrastructure Reinvestment Program. This program was created to bring existing power plants back into operation on the condition that pollutants or greenhouse gas emissions are avoided or reduced. The Trump administration has kept the program very subtle, renaming it the Energy Dominance Financing Program.

In its press release, the Department of Energy says, perhaps incorrectly, that the EDF program was created under the Working Families Tax Cuts Act. It was instead licensed under the One Big Beautiful Bill Act.