Microsoft’s power deal with Constellation still needs key permits

Microsoft (NASDAQ:MSFT) and Constellation Energy (NASDAQ:CEG) on Friday said they signed a deal that will restart part of the storied Three Mile Island nuclear power plant. However, Constellation (CEG) has yet to file for necessary government permits, Reuters reported, citing energy regulators.

A spokesperson for the Nuclear Regulatory Commission said the agency is prepared to discuss the rationale for the restart with Constellation (CEG). The company on Friday it expected the NRC review process to be completed in 2027.

The planned restart of the nuclear plant is another sign of how artificial intelligence technology has become a key source of growing demand for electricity. Microsoft (MSFT) is among the technology giants that has staked its future on AI, whose global energy consumption may double by 2026 to equal what Japan uses in a year, the International Energy Agency forecast in January.

Nuclear energy is seen as more reliable than solar and wind power, and it doesn’t emit as much carbon as burning coal and other hydrocarbons. Amazon (AMZN) this year bought a nuclear-powered data center in Pennsylvania.

Three Mile Island, which suffered a partial meltdown in 1979 and aroused public sentiment against nuclear energy, requires federal, state and local permits to restart. According to the 20-year agreement with Microsoft (MSFT), Constellation will restart an undamaged reactor that had become too expensive to operate and was closed in 2019, and sell power to the tech giant.

Constellation’s (CEG) stock jumped 22% to a record high after the deal with Microsoft (MSFT) was announced on Friday. The

Constellation (CEG) estimated it will spend about $1.6 billion to restart the reactor by early 2028.

Microsoft (MSFT) already buys nuclear energy from Constellation (CEG) when wind and solar power aren’t available for a data center in Virginia. The tech giant in 2023 signed a deal with Helion Energy to buy fusion energy when it comes online.