Microsoft Plans to Use Nuclear Energy for Data Centers

By Laila Kearney and Timothy Gardner

NEW YORK/WASHINGTON (Reuters) – Microsoft's plan to restart a Three Mile Island nuclear reactor aims to power its expanding data centers, highlighting tech industry's reliance on nuclear energy as a quick, climate-friendly solution to escalating electricity demands.

However, meeting this rising demand with nuclear reactors poses challenges. Companies face significant regulatory hurdles, potential fuel supply issues, and possible local and environmental opposition.

On Friday, Microsoft and Constellation Energy announced an agreement to restart a unit at the Three Mile Island plant in Pennsylvania, marking a potential first for nuclear-powered data centers.

Constellation’s CEO, Joe Dominguez, emphasized that nuclear power is the only reliable and climate-friendly energy source available to meet Big Tech's needs, suggesting that weather-dependent renewables like wind and solar may not suffice.

This announcement follows a similar agreement in March where Amazon purchased a nuclear-powered data center from Talen Energy, indicating growing interest in nuclear contracts for data centers.

The urgency for these initiatives is pronounced, with U.S. data center power use projected to triple from 2023 to 2030, requiring an estimated 47 gigawatts of new generation capacity, according to Goldman Sachs. The investors and regulators stress that this electricity surge should not lead to a significant increase in greenhouse gas emissions.

However, the execution of this deal poses significant challenges. Kate Fowler, global nuclear energy leader for Marsh, noted, "Nobody has done this before." The Three Mile Island plant was infamous for a partial meltdown in 1979, marking it as a significant nuclear incident in U.S. history.

Plans for the Unit 1 reactor to restart involve a $1.6 billion project aimed at resuming operations by 2028 to meet Microsoft’s regional data center power needs. Yet, crucial permits for the plant's revival are not yet filed and obtaining them may be challenging due to local opposition stemming from historical safety concerns.

The reactivation will also face technical challenges, with experts warning that resuming operations after five years of dormancy may incur costly and time-consuming issues.

The broader challenges impacting nuclear energy ties for tech firms are significant; restrictions imposed on enriched uranium imports post-Russia's invasion of Ukraine complicate procurement. Furthermore, acquiring licenses from the U.S. Nuclear Regulatory Commission (NRC) could be challenging, as the agency deals with a backlog of new reactor requests and potential project delays.

Although there are legislative efforts to expedite the NRC’s licensing process, the sheer volume of projects may stretch their resources thin. For the Talen energy project, financial concerns have arisen, as federal-level utilities predict higher transmission costs from Amazon's data center, which could impact public electricity rates and reliability.

Overall, simply purchasing power from nuclear plants for data centers can create competition for grid supplies, potentially driving up electricity costs. The Three Mile Island project symbolizes a critical test of public willingness to support expanded nuclear power, with experts emphasizing the need for community engagement to gain societal acceptance.

Key Challenges Ahead
– Regulatory hurdles and environmental opposition.
– Securing new licenses and permits for operation.
– Technical challenges from plant dormancy.
– Financial implications for public electricity pricing.

Conclusion
The success of Microsoft's initiative to leverage nuclear energy for its data centers hinges on overcoming significant regulatory, financial, and public acceptance challenges.