Cooling towers at the Three Mile Island nuclear power plant in

Cooling towers at the Three Mile Island nuclear power plant in
Middletown, Pennsylvania, Oct. 30, 2024.

Danielle DeVries | CNBC

MIDDLETOWN, Pa. — The owner of the Three Mile Island nuclear power
plant is embarking on an ambitious plan to restart operations before
the end of the decade, marking the latest chapter in the history of a
plant that symbolizes the future promise, past struggles and lingering
fears of nuclear energy in the United States.

The twin cooling towers that stretch hundreds of feet above the
Susquehanna River just south of Middletown, Pennsylvania, went dormant
in 2019 after billowing water vapor into the sky for four decades. Its
owner at the time, [1]Exelon, permanently shut down the Unit 1 reactor,
citing "[2]severe economic challenges."

Unit 1 is one of a dozen reactors that closed in the U.S. over the past
decade as nuclear industry struggled to compete against cheap and
abundant natural gas. But the fortunes of the industry have shifted
dramatically this year as deep-pocketed technology companies turn to
nuclear power to meet the tremendous electricity consumption of their
future business: artificial intelligence.

[3]Constellation Energy, the plant's current owner, plans to restart
Unit 1 in 2028, subject to monitoring and approval by the [4]Nuclear
Regulatory Commission. Constellation, headquartered in Baltimore,
[5]spun off from Exelon in 2022; it has the nation's [6]largest fleet,
or group, of nuclear power plants, operating 21 of the 94 reactors in
the U.S.

"This is a plant that we ran and ran very well," plant manager Trevor
Orth told the NRC at an Oct. 25 meeting. "We shut it down. We
understand how we shut it down, and we have a good idea of how we're
going to restart this."

The main control room of the Three Mile Island nuclear power plant in
Middletown, Pennsylvania, Oct. 30, 2024.

Danielle DeVries | CNBC

While Constellation will restore the plant, it will ditch the name
Three Mile Island. The plant will be rechristened the Crane Clean
Energy Center, after the late CEO of Exelon, Chris Crane. Constellation
said the restart will cost $1.6 billion, financed by the company's own
funds.

( [7]Take a deeper look inside the Three Mile Island nuclear power
plant here. )

[8]Microsoft has made the restart of Unit 1 possible through an
agreement to purchase the full electricity output from the plant for 20
years, a sign of the growing role the tech sector is playing in shaping
the future of the U.S. power industry.

Microsoft said the agreement is part of its strategy of meeting the
growing electricity needs of its data centers with power that is free
of carbon dioxide emissions in an effort to mitigate the impact of its
business on the climate.

Part of a control panel at the Three Mile Island nuclear power plant in
Middletown, Pennsylvania, Oct. 30, 2024.

Danielle DeVries | CNBC

Those data centers are playing a critical role in the U.S. economy,
housing servers that run the cloud computing that businesses and
consumers now rely on for life's digital daily tasks. They are also
essential for the development of artificial intelligence, technology
that is viewed as critical for the nation's future economic
competitiveness and national security.

With four years until the planned restart, one of the big uncertainties
is whether Constellation can deliver the power to Microsoft on time.
Nuclear projects are notoriously plagued by long delays, big cost
overruns and cancellations. But Unit 1 is in good condition and
Constellation is confident the plant will restart on schedule, said
Bryan Hanson, the company's chief generation officer.

Most of the restoration at Unit 1 will be normal maintenance work that
Constellation conducts regularly on its fleet of nuclear plants, Hanson
said during an Oct. 30 tour of the plant.

"Not an ounce of concrete needs to be poured, not one piece of rebar
needs to be tied, not one cable needs to be pulled. The infrastructure
is here," the executive said. "The challenge of delays — I don't see
it."

A control panel in the main control room of the Three Mile Island
nuclear power plant in Middletown, Pennsylvania, Oct. 30, 2024.

Danielle DeVries | CNBC

Constellation's decision to restart Three Mile Island follows Holtec
International's decision to restart its [9]Palisades nuclear plant in
Michigan. Palisades is poised to become the first reactor to restart
operations in U.S. history in 2025 after shutting down.

Holtec has plans to nearly double the power capacity of the facility in
the 2030s by building two [10]small modular reactors, next-generation
technology that promises to make nuclear plants less costly and easier
to deploy.

[11]Amazon and [12]Alphabet's Google recently announced investments in
small modular reactors.

While Constellation has not committed to building a small modular
reactor at any of its plants yet, Hanson said the company is open to
working with the tech sector to build new nuclear reactors in the U.S.

"If our customers come to us again, like a Microsoft, and say 'we want
to help you build new nuclear' — we'll probably join hands and figure
out a way to do that," Hanson said.

Lingering fears

Unit 1 is a short walk from the site of the worst nuclear accident in
U.S. history.

The partial meltdown of the Unit 2 reactor at Three Mile Island in 1979
had a chilling effect on the development of new nuclear plants in the
U.S. Unit 2 has not operated since the accident and is being
decommissioned by its current owner, [13]Energy Solutions, a private
nuclear services company.

Unit 1 operated safely and efficiently before it was shut down for
economic reasons, said Mike Goff, acting assistant secretary for the
Office of Nuclear Energy at the Department of Energy.

But Pennsylvania state Rep. Thomas Mehaffie said his constituents have
mixed feelings about the restart of Unit 1, particularly those who are
old enough to remember the accident at Unit 2.

Pennsylvania state Rep. Tom Mehaffie speaks in front of the Three Mile
Island nuclear power plant in Middletown, Pennsylvania, Oct. 30, 2024.

Danielle DeVries | CNBC

"Of course people who were here during that time frame, who are older —
there is concern. There always has been concern," said Mehaffie, who
represents the communities around Three Mile Island at the state
legislature in Harrisburg. Mehaffie's father was a union electrician
who helped build the nuclear plants.

Hanson said the nuclear industry has learned from this chapter of its
history.

"The 1979 accident taught us that our standards weren't right at the
time," Hanson said. The U.S. nuclear industry today has the best
safety, reliability and operational standards in the world, he said.

While some constituents have concerns, others see the economic value
that the restart will bring, Mehaffie said. The restart of Unit 1 will
bring an estimated 3,400 jobs to the region, according to a study by
the [14]Pennsylvania Building & Construction Trades Council.

Grid reliability

The planned restart of Three Mile Island is also a step to help ensure
the region's electric grid remains reliable, Mehaffie said. Unit 1 will
bring back 835 megawatts of carbon-free electricity, equivalent to the
consumption of more than 600,000 homes, at a time when the grid is on
the brink of faltering.

Electricity demand is outpacing supply, as power plants, particularly
those that run on coal, are retired faster than new capacity is built,
grid operator PJM Interconnection warned in July. PJM operates the grid
in Pennsylvania and 12 other states.

"Grid reliability is everything," Mehaffie said.

PJM has forecast that [15]electricity demand will surge nearly 40% by
2039 due to the expansion of data centers, manufacturing and the
electrification of industry and transportation. Meanwhile, 40 gigawatts
of power generation is [16]at risk of retirement by 2030; that's about
21% of PJM's installed capacity.

"We're seeing potentially catastrophic early retirements of
dispatchable resources," Mark Christie, a commissioner at the Federal
Energy Regulatory Commission, said during a [17]public hearing Nov. 1.

A cooling tower at the Three Mile Island nuclear power plant in
Middletown, Pennsylvania, Oct. 30, 2024.

Danielle DeVries | CNBC

Federal energy regulators are worried that tech companies' [18]pursuit
of deals that redirect power from the electric grid directly to their
data centers could exacerbate supply shortages and threaten grid
stability.

Microsoft said the electricity it will be purchasing from Unit 1 will
feed into the grid and will not directly power its data centers.
Microsoft is committed to bolstering the grid as it secures power for
its data centers, said Alistair Speirs, senior director of global
infrastructure for Microsoft's Azure cloud platform.

"When we operate in the community, if we're not stabilizing, adding
resiliency to the grid, then it's hard for us to keep our social
license to operate," Speirs said.

Microsoft is not involved in the physical restoration of the plant,
Hanson said, but Constellation is providing status reports to the
company.

Restoration and restart timeline

Constellation laid out how it plans to restart the plant in the
company's first [19]public meeting with the Nuclear Regulatory
Commission on Oct. 25. While Wall Street is generally bullish on the
restart, Citi has cautioned that Constellation could face challenges in
completing the project on schedule.

"Given the regulatory and physical challenges, we assume that
[Constellation] is likely to experience some delays and cost overruns
to execute on the restart," Citi analyst Ryan Levine told clients in an
Oct. 14 note.

Citi [20]initiated coverage of Constellation with a neutral rating in
October on delay concerns. Constellation's stock has gained more than
90% since the start of the year and 12% since the Three Mile Island
restart was announced Sept. 20.

Levine is an outlier. The vast majority of analysts rate the stock a
buy or strong buy, with the average price target predicting more than
23% upside.

The turbine deck of the Three Mile Island nuclear power plant in
Middletown, Pennsylvania, Oct. 30, 2024.

Danielle DeVries | CNBC

Hanson said crucial and expensive equipment such as the steam
generators and main power generator have undergone inspection and
maintenance by Constellation and are in good condition.

The steam generators were replaced in 2009 and are ready for restart,
he said. The internals of the main power generator, built by General
Electric nearly 50 years ago, were replaced a little over a decade ago,
he said. The main generator has been cleaned and needs some routine
maintenance, he said.

The plant's main power transformers need to be replaced at a cost of
$75 million to $100 million, Hanson said. The transformers are on order
with delivery expected in late 2026, he said.

One of the cooling towers has been gutted and will be refurbished. The
analog control room will remain the same with the exception of some
rewiring, Hanson said.

The simulator that mimics the control room also needs to be restored so
plant operators can be trained there. One of the most critical items
for restoring plant operations is training operators for NRC
certification, a process that takes about 18 months, Hanson said.

The turbine deck of the Three Mile Island nuclear power plant in
Middletown, Pennsylvania, Oct. 30, 2024.

Danielle DeVries | CNBC

Constellation is currently prohibited from operating and loading fuel
into the reactor vessel because the plant was permanently shut down.
Constellation plans to file an exemption request in November that would
remove these restrictions if approved by the NRC.

"That will officially mark the start of our restart activities," Dennis
Moore, senior manager of licensing at Constellation, told the NRC.

Constellation plans to file a request to change the plant's name from
Three Mile Island to the Crane Clean Energy Center in February. Later
in 2025, Constellation will submit filings on the plant's technical
specifications, environmental impact, emergency plan, and site security
plan for NRC review, the company said.

Constellation intends to send an operational readiness letter to the
NRC by July 2027. The company would then begin testing and return to
power if the NRC determines that the plant is ready to operate and
authorizes placing fuel in the reactor.

In the meantime, Constellation does not need NRC permission to "start
turning wrenches and doing restoration work" at the plant, said Scott
Burnell, a spokesperson for the regulator. The NRC will be monitoring
the work to make sure the regulator's requirements are met, Burnell
said.

The restarts at Three Mile Island and Palisades will likely secure NRC
approval, Goff said.

"They are an independent agency, but I expect if the safety cases are
presented, they're going to approve it," Goff [21]told CNBC in
September.

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References

1. https://www.cnbc.com/quotes/EXC/
2. https://www.nrc.gov/docs/ML1717/ML17171A151.pdf
3. https://www.cnbc.com/quotes/CEG/
4. https://www.nrc.gov/info-finder/reactors/tmi1.html
5. https://www.exeloncorp.com/newsroom/exelon-completes-separation-of-constellation
6. https://www.constellationenergy.com/newsroom/2024/Constellations-Clean-Energy-Centers-Faced-Climate-Crisis-Head-On-with-Near-Full-Power-Summer-Performance.html
7. https://www.cnbc.com/2024/11/16/look-inside-the-three-mile-island-nuclear-power-plant.html
8. https://www.cnbc.com/quotes/MSFT/
9. https://www.cnbc.com/2024/08/03/how-a-shuttered-power-plant-in-michigan-could-pave-the-way-for-more-nuclear-energy.html
10. https://www.cnbc.com/2024/09/07/how-small-modular-reactors-could-expand-nuclear-power-in-the-us.html
11. https://www.cnbc.com/quotes/AMZN/
12. https://www.cnbc.com/quotes/GOOGL/
13. https://www.tmi2solutions.com/
14. https://www.pabuildingtrades.org/ULWSiteResources/pabctc/Resources/file/News-Events/CCEC/CCEC-Brattle-Report-Condensed.pdf
15. https://insidelines.pjm.com/pjm-publishes-2024-long-term-load-forecast/
16. https://www.pjm.com/-/media/library/reports-notices/special-reports/2023/energy-transition-in-pjm-resource-retirements-replacements-and-risks.ashx
17. https://www.youtube.com/watch?v=2Ze-1dLQIRk&t=10222s
18. https://www.cnbc.com/2024/11/04/tech-partnerships-with-power-companies-for-ai-in-doubt-after-ferc-order.html
19. https://adamswebsearch2.nrc.gov/webSearch2/main.jsp?AccessionNumber=ML24296B213
20. https://www.cnbc.com/2024/10/15/citi-initiates-constellation-warns-of-potential-delays-at-three-mile-island.html
21. https://www.cnbc.com/2024/09/27/americas-coal-communities-could-help-the-us-triple-nuclear-power.html