What Microsoft’s Nuclear Deal Means for the Future of Energy

The Three Mile Island Nuclear Power plant in 1979, the year of the partial meltdown (Wikipedia Commons)

Constellation, an American energy supplier, announced a 20-year Power Purchase Agreement (PPA) with Microsoft on September 20. The PPA will establish the Crane Clean Energy Center (CCEC) and restart the Pennsylvania nuclear plant Three Mile Island’s Unit 1 Reactor. This agreement is just one of many as AI and BigTech companies seek clean, reliable sources to power their energy-intensive innovations.

The increasing adoption of artificial intelligence is driving a surge in data center power consumption. Goldman Sachs Research estimates that AI will likely increase data center power demand by 160 percent. To manage this strain on power grids, BigTech companies must either ramp up their products’ energy efficiency or find new power sources. 

However, many of these companies, including Microsoft, have made ambitious climate pledges to reduce emissions, complicating the search for power sources. In fact, Microsoft not only pledged to shift to 100 percent renewable energy by 2025 but also to remove all carbon the company has emitted directly or through electrical consumption by 2050. Therefore, Microsoft must find a renewable source that is both reliable and productive enough to provide energy for its round-the-clock, intensive energy needs.

Goldman Sachs Projection for AI Data Center power consumption (X)

While renewable energy sources like solar and wind offer clean alternatives, they can provide output intermittently, making it challenging to meet the consistent energy demands of data centers. “Powering industries critical to our nation’s global economic and technological competitiveness, including data centers, requires an abundance of energy that is carbon-free and reliable every hour of every day, and nuclear plants are the only energy sources that can consistently deliver on that promise,” said Joe Dominguez, president and CEO of Constellation in a press release. Thus, the Microsoft-Constellation PPA was born. 

The deal involves restarting the Three Mile Island Unit 1 reactor near Harrisburg, Pennsylvania. Three Mile Island is best known for its Unit 2 reactor, which experienced a partial meltdown in March 1979. It was the most serious commercial nuclear accident in the United States. Following the accident, the Unit 2 reactor was permanently shut down, and the Unit 1 reactor was restarted in the mid-1980s, running until its 2019 shutdown for “economic reasons.” Along with the restart, the plant will be renamed “Crane Clean Energy Center” after the late Chris Crane, CEO of Constellation’s former parent company.

Microsoft will purchase 100 percent of the plant’s energy once it is restarted, possibly as early as 2028 (Three Mile is only the second nuclear power plant to be restarted, after the Palisades Nuclear Plant in Michigan, which is expected to restart by 2025). Other tech companies like Amazon have also been purchasing nuclear-powered data centers, leading to a nuclear revival after a decade of plant shutdowns caused by competition from natural gas and other renewables. As Constellation CEO Joe Dominguez told Bloomberg, “[t]here’s no version of the future of this country that doesn’t rely on these nuclear assets.” With Big Tech’s power purchases, nuclear power may be the future of energy.

As the tech industry increasingly seeks sustainable solutions to power its innovations, the resurgence of nuclear energy offers a promising path forward. The success of this partnership could pave the way for similar collaborations, demonstrating the potential for nuclear power to play a vital role in addressing future energy challenges.