Long-term power purchase agreements with Microsoft and Google, combined with billions of dollars in federal financing, are reviving retired nuclear reactors in the United States, a shift that carries significant implications for electricity infrastructure, public finances and safety oversight as data-center electricity consumption accelerates.
Three Mile Island Unit 1 in Pennsylvania, which closed in September 2019 for economic reasons, is slated to return to service as the Crane Clean Energy Center under a 20-year power purchase agreement between Constellation Energy and Microsoft. Constellation targets 2027 for the restart, subject to completion of the regulatory process. Unit 1 is distinct from the reactor that suffered the 1979 partial meltdown; that accident occurred in Unit 2 and prompted sweeping changes in regulation and operations, though Unit 1 continued operating for decades afterward. The proposed restart is now subject to a site-specific Nuclear Regulatory Commission inspection and oversight process.
In Iowa, Duane Arnold stopped generating electricity in August 2020 after damage from a powerful derecho, following a 2018 agreement between NextEra Energy and Alliant Energy that shortened the plant's power contract and projected nearly $300 million in savings for Alliant customers over 21 years on a net present value basis. NextEra and Google subsequently announced a 25-year power agreement supporting the plant's restart, with operations targeted for early 2029. A facility whose retirement was presented as a customer savings measure is therefore being restored under a different commercial arrangement.
Palisades in Michigan, which stopped operating in May 2022 and was sold to Holtec for decommissioning, is pursuing a separate restart path with government support. Its electricity is contracted to Wolverine Power Cooperative and Hoosier Energy rather than directly to a technology company. The Department of Energy has closed financing of up to $1.52 billion for Palisades, $1 billion for the Crane restart and $1.9 billion for Duane Arnold, approximately $4.42 billion combined. These amounts represent financing commitments rather than money fully disbursed, and federal loans must be repaid. Michigan has separately announced $300 million in state funding for reopening activities, and in September 2024 the governor's office announced more than $1.3 billion in USDA awards supporting restoration of service and lower electricity costs, including a grant exceeding $650 million for Wolverine Power Cooperative.
The renewed commercial interest follows decades of limited nuclear construction. Only three new commercial reactors entered service in the United States after 1996: Watts Bar Unit 2 in Tennessee in 2016, and Vogtle Units 3 and 4 in Georgia in 2023 and 2024. The Energy Information Administration attributes the earlier slowdown to slowing electricity-demand growth, high construction costs, financial risk and public opposition, and reports that U.S. demand grew an average of approximately 0.1% annually between 2005 and 2019, compared with about 1.7% annually between 2020 and 2025, identifying data-center electricity use as a driver of the newer growth.
The arrangements also raise questions about grid capacity and cost allocation. Restarting reactors adds generating capacity but does not automatically provide the transmission lines and substations needed to deliver that electricity, and the EIA has documented concerns that some arrangements connecting data centers directly with nuclear generation could allow them to avoid fees supporting the wider grid, potentially shifting costs to other customers. Edwin Lyman, director of nuclear power safety at the Union of Concerned Scientists, has questioned the technical and financial uncertainties surrounding technology-company nuclear agreements, warning in a 2024 statement that unsuccessful projects could ultimately create financial demands on taxpayers and utility customers. At Palisades, Lyman has argued that replacing aging steam generators would be safer than repairing them; Holtec said its repairs were safe and subject to NRC oversight, and University of Michigan professor emeritus John Lee supported the restart and refurbishment approach while emphasizing that equipment must satisfy NRC inspectors.
Technology-company nuclear plans extend beyond restarts. Kairos Power has identified Oak Ridge, Tennessee, as the location of its planned Hermes 2 plant, whose electricity would enter the regional grid serving Google data centers in Tennessee and Alabama under an agreement with the Tennessee Valley Authority. Amazon describes a planned facility in Richland, Washington, involving Energy Northwest and X-energy, with up to 12 reactor modules and an intended timeframe of the early 2030s. The United States still lacks a permanent disposal facility for commercial spent nuclear fuel, and the Government Accountability Office reports that spent fuel continues accumulating at plant sites while the federal government remains responsible for developing permanent disposal and has paid reactor owners compensation for failing to meet its acceptance commitment. Water supplies will also influence future locations, as conventional nuclear generation generally requires substantial cooling water, and proposed plants' requirements must be assessed individually rather than inferred from size or reactor designation.
Data-Center Demand Drives Nuclear Restart Deals at Three Mile Island and Duane Arnold
By: IDCNOVARegion: North America