Energy Department loans $1B to help finance the restart of nuclear reactor on Three Mile Island

The U.S. Department of Energy will provide a $1 billion loan to help finance Constellation Energy’s restart of the mothballed 835 MW Three Mile Island reactor—under a 20-year power purchase agreement with Microsoft—to supply data-center power; the reactor, which can power roughly 800,000 homes, was shuttered for five years and Constellation plans to spend $1.6 billion restoring equipment with a target restart in 2027. The loan comes from a $250 billion energy-infrastructure program authorized in 2022 and is intended to lower Constellation’s financing costs; terms have not been disclosed. The move reflects the administration’s push to bolster nuclear energy (and support AI-related infrastructure demand) and underscores renewed policy and market interest in nuclear to secure baseload capacity for growing data-center loads and climate goals.

Analysis

The U.S. Department of Energy will provide a $1.0 billion loan to Constellation Energy to help finance the restart of the site's lone operating reactor at Three Mile Island, an 835 megawatt unit the DOE says can supply the equivalent of roughly 800,000 homes; Constellation plans to spend $1.6 billion on restoration under a 20-year power purchase agreement with Microsoft and targets a 2027 restart. The loan is being issued from a broader $250 billion energy infrastructure program authorized in 2022 and is presented as consistent with the administration’s priorities to bolster nuclear power and support AI-driven data-center demand. For Constellation the federal financing should lower project funding costs and de-risk long-term cash flows tied to the Microsoft PPA, while Microsoft secures a dedicated supply source for its data centers. Material unknowns and timing risks remain: loan terms were not disclosed, the plant has been offline for five years and requires turbine, generator, transformer and control-system work, and the site carries historical regulatory and reputational sensitivity due to the 1979 accident and a 2019 shutdown for economic reasons.

Key Decisions for Investors

• Consider selective exposure to Constellation Energy to capture potential upside from lower financing costs and a long-term Microsoft PPA, but size positions conservatively until loan terms and capex funding schedules are disclosed
• Treat Microsoft’s PPA as a strategic supply assurance rather than a material earnings driver for MSFT equities; monitor PPA pricing and contract credit terms before increasing exposure on energy-security grounds
• Monitor regulatory approvals, loan-term disclosure, and 2027 project execution milestones as the primary catalysts and risks; consider hedging or avoiding increased leverage to this story until those milestones are met