Constellation Energy’s ambitious plan to restart the Three Mile Island Unit 1 as the Crane Clean Energy Center (CEC) is proceeding ahead of schedule, shooting for a 2028 start date, despite a new report that suggests Microsoft may be re-evaluating its data center strategy.
Just five months after Constellation announced a landmark 20-year power purchase agreement (PPA) with Microsoft to support the 835-MW Pennsylvania nuclear plant’s $1.6 billion restoration, the company announced it is ahead on several key workstreams.
Three Mile Island Unit 1 was prematurely shuttered in September 2019, after more than 40 years in service, owing to economic reasons. “In its last year of operation, the plant was operating at a 99% capacity factor—well above the industry average. The plant had an annual payroll of about $60 million and employed more than 600 full-time workers, in addition to the 1,000 highly skilled, mostly union craftspeople that supported the plant’s biennial refueling outages,” Constellation has noted. Under PPA agreement with Microsoft, the tech giant is slated to purchase the output generated from the renewed plant which includes energy, capacity and carbon-free attributes as part of its goal to help power its data centers in PJM with clean energy.
So far, Constellation has hired more than 200 full-time employees and plans to hire over 600 before the restart. Major maintenance and equipment upgrades are underway, including inspections of the steam generator, main generator, rotor, turbines, feedwater heaters, and condensers. A contract has also been awarded for three new main power transformers, requiring a $35 million investment for delivery in 2026, the company said on Feb. 19.
In addition, Constellation said it has filed an interconnection request with PJM and is on track to file all required licensing and regulatory documents with the Nuclear Regulatory Commission (NRC). “Constellation participated in the NRC’s first public meeting about Crane on Oct. 25 and submitted its initial restart plan on Nov. 4,” the company noted. In January, it filed a license amendment request to officially change the name of Three Mile Island Unit 1 to the Crane Clean Energy Center in honor of Chris Crane, a former company CEO.
“Every new milestone confirms our belief that the Crane Clean Energy Center can be returned to service better than ever, restoring 835 MW of carbon-free energy to the regional grid at a critical time for Pennsylvania and our nation,” said Joe Dominguez, Constellation president and CEO. “Major maintenance and upgrades are proceeding ahead of plan, new equipment has been ordered, and we are making tremendous progress on hiring and training the next generation of skilled workers to operate the plant at world-class levels of safety and performance, just as before.”
The Long Road to CEC’s Restart
According to the company’s NRC filings, Constellation’s restart plan for CEC involves extensive inspections, upgrades, and regulatory compliance steps to transition the plant back to full operation. The company is following the NRC Inspection Manual Chapter 2562, a framework designed for restoring previously shut-down light-water reactors.
As part of its physical restoration efforts, Constellation has implemented the Evaluation Process for Plant System Structure and Component (SSC) Restoration, which involves systematically assessing critical equipment. The process has so far confirmed that key infrastructure, including the enhanced once-through steam generators (EOTSGs), main generator, transformers, and cooling towers, is in good condition or has a defined replacement strategy. A 100% eddy current inspection of steam generator tubes in 2024, observed by the NRC, showed no abnormal conditions.
The restart effort also includes reinstating emergency response facilities, updating the site’s Emergency Plan (Eplan) to comply with NRC regulations, and realigning security protocols to a fully operational reactor state. This involves new physical security measures, modern surveillance systems, and hiring additional security personnel to meet NRC’s 10 CFR § 73.55 requirements. In addition, Constellation has created a Restoration Quality Assurance Program (RQAP) to bridge the gap between the previous Decommissioning QA Program (DQAP) and the operational requirements of an active nuclear plant. The company has also moved to reinstate accredited operator training programs, including the full restoration of the plant simulator, which had been left without power since 2019.
Crane Just the Start of a Lucrative Opportunity
The restart is a major undertaking for Maryland-headquartered Constellation Energy, which has established itself as a major competitive generator committed to decarbonization since its 2022 spinoff from parent Exelon. The independent, publicly traded company today boasts a 31.6-GW fleet (and 4.7 GW in contracted generation), including the largest nuclear fleet in the nation, comprising 22 GW from 25 units at 14 nuclear plant, including its recently acquired share in the 2.6-GW South Texas Project Electric Generating Station (STP).
In January, the generation giant moved to acquire Calpine Corp., a business combination that could enlarge its fleet to 60 GW. As Dominguez explained to investors in January, the combined company’s most prominent opportunity lies in demand growth projections, driven by large part by data centers, digitalization, and electrification. “We’re going to create this largest, cleanest, reliable generation at a time when these megawatts are being recognized as premium products because they’re needed to meet the growing demand for energy for our customers,” he said. “The fact of the matter is, demand for our products is expected to grow at levels we haven’t seen in a lifetime.” He suggested that demand growth within the Electric Reliability Council of Texas (ERCOT) and PJM Interconnection pose an especially lucrative prospect.
In its Feb. 18–released 10-K filing, Constellation said significant investments planned by hyperscalers, including Microsoft, Google, and Amazon, pose a considerable opportunity. “According to the DOE, data centers are one of the most energy-intensive building types, consuming 10 to 50 times the energy per floor space of a typical commercial office building. Efforts to reduce GHG emissions could lead to further electrification of the U.S. economy, including electrification of transportation, industrial operations, heating and cooling, and appliances, which could materially increase demand for electricity. For companies like us whose core competency is safely generating and serving electricity and related products to our customers, the increasing demand provides natural growth opportunities,” it said.
Constellation’s strategy will focus on optimizing its nuclear fleet through license extensions, 1 GW in uprates, and selective acquisitions, while expanding sustainability solutions such as clean hydrogen, energy storage, and efficiency programs. Notably, it plans to leverage long-term PPAs and Inflation Reduction Act (IRA) tax credits to secure revenue stability and drive investment. It expects, for example, that the CEC will be “eligible for the technology-neutral clean electricity PTC [production tax credit] (45Y) provided for by the IRA for its first 10 years of operations,” it noted.
“We estimate the project will require approximately $1.6 billion of cash from operations for capital expenditures necessary to restart the plant, with an estimated in-service date of 2028,” it said. However, “The restart of the plant and delivery of electricity under the PPA is subject to certain regulatory approvals, including the NRC comprehensive safety and environmental review, as well as permits from relevant state and local agencies. Additionally, through a separate request, we will pursue obtaining a renewed license that will extend operations at the plant to at least 2054,” it noted.
For its existing fleet, as well as the CEC and planned uprates, Constellation plans to leverage the 45U PTC, which extends through 2032. “The nuclear PTC (45U) provides a transferable credit up to $15 per MWh (a base credit of $3 per MWh with a five times multiplier provided certain prevailing wage requirements are met) and is subject to phase-out when annual gross receipts are between $25.00 per MWh and $43.75 per MWh.” it noted.
Workforce, Delays Key Risks
Success of the CEC project, however, remains tied to several attributes, it noted. A major concern is rooted in securing and retaining an adequate workforce, including employees with specialized knowledge for generation operations. “Our ability to source qualified employees will impact the timing and cost of the restart. If we are unable to source the necessary workforce, it could result in unfavorable financial results and/or a delay to Crane’s restart,” the company noted.
Delays could also prove costly. The scope of regulatory approvals for the CEC restart requires the NRC comprehensive safety and environmental review, a renewed license, an interconnection agreement approved by the Federal Energy Regulatory Commission, and permits from relevant state and local agencies. “Failure to obtain the necessary approvals could result in the impairment of amounts capitalized,” the company’s 10-K says. “The restart is a complex undertaking including procuring or restoring specialized components on a critical timeline. Failure to meet contractual timelines could result in significant penalties. Overages in costs or unforeseen issues could result in lower than planned returns on the investment.”
Constellation noted that its most recent estimate of capital expenditures is approximately $3 billion and $3.5 billion for 2025 and 2026, respectively. “Approximately 35% of projected capital expenditures are for the acquisition of nuclear fuel, which includes additional nuclear fuel to increase inventory levels in response to the potential for the continuing Russia and Ukraine conflict to impact our long-term nuclear fuel supply. Additionally, the above estimates of capital expenditures includes $1.7 billion of growth capital expenditures, including our planned restart of Crane, nuclear uprates, behind-the-meter infrastructure, and license renewals,” it said. “The remaining amounts primarily reflect additions and upgrades to existing generation facilities (including material condition improvements during nuclear refueling outages).”
Microsoft’s Surging Power Needs
For now, Constellation views its execution of the PPA with Microsoft as a key element in meeting corporate demand for clean energy. “Corporations are facing increasing pressure from their customers and investors to align their businesses with environmental and sustainability objectives, including supporting goals to reduce GHG emissions in their business operations. Leading institutional investors and money managers are increasingly considering sustainability as a key factor in investment decisions and are increasingly advocating for more transparency in disclosure on climate-related matters and pledging to align proxy voting to climate-rated proposals with its fiduciary duty,” its 10-K notes. “An increasing number of corporations are also proactively making commitments to reducing their GHG emissions footprint, either through procuring increasing amounts of clean energy, such as RECs, EFECs, or emissions offsets, to offset their carbon footprint over time. The execution of the PPA with Microsoft that will support the restart of Crane is a recent example.”
Microsoft has moved to aggressively expand its data center capacity, suggesting it expects to spend $80 billion this fiscal year on AI data centers. In late January, CEO Satya Nadella noted the company has “more than doubled our overall data center capacity in the last three years and we have added more capacity last year than any other year in our history.” However, executives have noted the company faces two key constraints: power and space.
The company, committed to being a carbon negative, water positive, and zero waste company by 2030, has procured much of its power through long-term investments, contracting more than 34 GW of renewable energy, including projects in 24 countries. During fiscal year 2023, it consumed 23.6 TWh of electricity, nearly all sourced with renewable energy credits and PPAs. That’s more than double the 10.2 TWh it consumed in fiscal year 2020.
While no projections are publicly available, Microsoft’s power consumption is expected to increase significantly in the coming years, driven by the expansion of its cloud computing infrastructure and the growing demand for energy-intensive AI and related services. However, that will depend heavily on how the company balances its overall investment with the need to optimize resource allocation, adapt to evolving technology, and navigate the complexities of the energy market.
In a notable market shift—one that sent nuclear energy stocks into flux—investment bank TD Cowen suggested Friday that Microsoft may be scaling back its data center investments. Analysts led by Michael Elias reported that Microsoft has canceled leases totaling “a couple hundred” megawatts of U.S. data center capacity with at least two private operators. Additionally, the note suggested the company has slowed the conversion of statements of qualification into leases and reallocated a significant portion of its international spending to U.S. operations.
Microsoft, however, pushed back against the notion that its overall infrastructure expansion is slowing. “Thanks to the significant investments we have made up to this point, we are well positioned to meet our current and increasing customer demand,” a company statement posted on Seeking Alpha reads. “Last year alone, we added more capacity than any prior year in history. While we may strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions. This allows us to invest and allocate resources to growth areas for our future. Our plans to spend over $80B on infrastructure this FY remain on track as we continue to grow at a record pace to meet customer demand.”
Source: POWER Magazine
