Constellation Energy's Three Mile Island Reactor Restart Plan Sparks Market Surge and Microsoft Partnership

Utilities Shares Jump on Three Mile Island Restart Plan -- Utilities Roundup

Shares of power producers and utilities surged after a deal between Constellation Energy and Microsoft to restart Pennsylvania's Three Mile Island, the site of the country's worst nuclear power accident, to help power the tech giant's growing artificial intelligence ambitions. Constellation will revive the plant's undamaged reactor, which was too costly to run and closed in 2019, and sell the power to Microsoft. The plan signals the gargantuan amount of power needed for data centers for AI, along with the tech industry's thirst for a carbon-free, round-the-clock electricity source needed to meet climate goals. Vistra Corp., another nuclear owner, is up for its 10th trading day in a row. Write to Patrick Sullivan at patrick.sullivan@wsj.com

Constellation Energy Shares Rise on Power Deal Microsoft, Restart of Three Mile Island Reactor

Constellation Energy shares rose in premarket trading Friday after signing a deal to restart Pennsylvania's Three Mile Island nuclear plant to help power the Microsoft's growing artificial intelligence ambitions. Constellation Energy shares rose 7% ahead of the morning bell, trading at $222.90. The two companies signed a 20-year power purchase agreement. The deal sets in motion the launch of the Crane Clean Energy Center and the restart of the Three Mile Island Unit 1. The undamaged Unit 1 reactor sits next to Unit 2, which was shut down after a partial core meltdown in 1979. The incident led to a heightened awareness of nuclear plants' potential safety problems and contributed to a loss of enthusiasm for the industry that lasted decades. Unit 1 wasn't affected by the accident. Under the terms of the agreement, Constellation will revive the plant's undamaged reactor--which closed in 2019 due to its high running costs--and then sell the power to Microsoft. The plant will be renamed the Crane Clean Energy Center and is expected to come online in 2028. Write to Adriano Marchese at adriano.marchese@wsj.com

Why Constellation Energy, NuScale Power, Nano Nuclear, and Oklo Stocks All Popped Today | The Motley Fool

Let's start with some background for those who don't remember when Three Mile Island scared the pants off everyone living on the East Coast. In the middle of the night on March 28, 1979, Three Mile Island's Unit 2 reactor (near Middletown, Pennsylvania) suffered a partial meltdown in what the U.S. Nuclear Regulatory Commission (USNRC) calls "the most serious accident in U.S. commercial nuclear power plant operating history." The release of radioactivity from the plant was minimal and caused "no detectable health effects on plant workers," much less nearby residents, according to the commission. Yet the terror inspired by the word "meltdown" alone sufficed to spark a movement, still ongoing, to tighten regulations on nuclear power plant construction. Thanks largely to these stricter regulations, operating a nuclear power plant is today one of the most expensive ways to produce electricity in the U.S. -- despite nuclear fuel being one of the cheapest fuels available. And yet America still needs power -- not least to run the giant server farms that power the kinds of artificial intelligence projects and cloud computing services that Microsoft wants to provide. Hence today's news. Having just signed "its largest-ever power purchase agreement with Microsoft," Constellation now needs a way to provide the power. Reopening Unit 1 (note, not Unit 2, which is still in the process of being decommissioned) at Three Mile Island will make it easy to provide this power. Constellation notes that this single reactor will produce "835 megawatts of carbon-free energy" for Microsoft and others and will be able to operate for "decades." Notably, however, restarting Unit 1 will entail "significant investments ... to restore the plant, including the turbine, generator, main power transformer and cooling and control systems." It will also require a comprehensive safety and environmental review, state and local permits, and USNRC approval. Constellation hopes to get all this accomplished by 2028. So this is a process that will take both time and money for Constellation to get started. That's important for investors to keep in mind when weighing an investment in the power company -- which isn't particularly cheap (at nearly 28 times earnings today), which hasn't generated positive free cash flow since 2019, and which doesn't even pay much of a dividend, only 0.7%. Investors in other nuclear power stocks, such as NuScale, Nano Nuclear, and Oklo, will be looking at the Three Mile Island news from a different perspective. Constellation's decision to reopen the nuclear power plant indicates growing interest in nuclear energy as a power source, and this may imply greater interest and investment in new power plant designs such as the ones these companies are working on. With four years to work with while Constellation spins up Three Mile Island, these companies have a window of opportunity. That said, all three remain speculative investments with little or no revenue to their credit (much less profit) and plenty of need for investment as they finalize their designs and seek government approvals and customer contracts. Valued below $1 billion each, these three small nuclear power stocks have plenty of room to grow.

This power company has outpaced Nvidia, could ink next nuclear deal after Three Mile Island

It is a watershed moment in the history of the U.S. nuclear industry. Constellation Energy plans to restart the Three Mile Island nuclear plant , with operations slated to resume in 2028 subject to approval by the Nuclear Regulatory Commission. Its stock has surged nearly 20% on the news. The deep pockets of Microsoft will breathe new life into the plant. The tech company signed a 20-year agreement to purchase clean power from the plant to offset emissions from its artificial intelligence data centers. The Three Mile Island restart is not just a milestone for Constellation. It demonstrates the growing financial opportunity that nuclear power represents for utilities and their investors. Only one power sector stock is hotter than Constellation right now. Vistra Corp. shares surged more than 14% after the Three Mile Island announcement Friday. VST YTD mountain Vistra shares, YTD The power company, headquartered outside Dallas, is viewed as one of the lead contenders to ink a data center nuclear deal next. Vistra leads the market Previously an obscure name, Vistra shares have soared more than 175% this year, blowing past the AI chip powerhouse Nvidia to lead the entire S & P 500 on its data center opportunity. Vistra completed the acquisition in March of two nuclear plants in Ohio and one in Pennsylvania through its $3.4 billion purchase of Energy Harbor . The broader utilities sector has gained about 25% this year, in large part due to the data center demand trend. Investors can play this trend through buying independent power producers like Vistra, rather than regulated utilities, because they dispatch power based on economics, according to Shahriar Pourreza, senior managing director of North American power and utilities at Guggenheim Securities. Jefferies initiated coverage of Vistra earlier this month with a buy rating, choosing the company as its best-in-class stock in the power sector. Wall Street analysts have an average stock price target of $116.89 per share, implying 26% upside from Thursday's close of $92.52, according to FactSet data. VST NVDA YTD line Vistra vs. Nvidia "Vistra's years of acquisitions, rationalizations, and lessons learned about risk have positioned the company well for the power markets of today," Jefferies analysts led by Julien Dumoulin-Smith told clients in a note earlier this month. "Vistra's timely acquisition of nuclear portfolio Energy Harbor in 2023 gives the company a coveted nuclear portfolio," the analysts said. Vistra CEO Jim Burke told investors that the company is having numerous conversations with customers about directly powering data centers with its plants and is "in due diligence for a number of sites." Burke specifically called out Comanche Peak, a twin reactor nuclear plant with 2.4 gigawatts of capacity outside Forth Worth, Texas. "We're seeing some interest in Comanche Peak," Burke told analysts on the company's second-quarter earnings call in August. Other power companies poised to benefit from the growing nuclear demand from data centers include NextEra Energy and Dominion Energy . NextEra CEO John Ketchum told investors in July that the company is considering restarting the Duane Arnold nuclear plant in Iowa "There would be opportunities and a lot of demand from the market if we were able to do something with Duane Arnold," Ketchum said on NextEra's second-quarter earnings call. NextEra was up just 1.4% on Friday, but has gained 37% so far this year. The power company has the equivalent of a buy rating from 62% of Wall Street analysts, though its stock has largely caught up with the Street's average price target of $83.94 per share, according to FactSet. Dominion Energy CEO Robert Blue told investors that the utility would consider locating a data center next to the Millstone nuclear plant in Waterford, Connecticut. Dominion has gained more than 22% this year, though nearly 80% of Wall Street analysts have put a hold on its stock for now.

Microsoft Taps Constellation For 20-Year Carbon-Free Power - 3,400 Jobs Coming To Pennsylvania - Constellation Energy (NASDAQ:CEG)

Three Mile Island Unit 1 was shut down for economic reasons exactly five years ago today. Constellation Energy Corporation CEG shares are trading higher after the company announced it signed a 20-year power purchase agreement with Microsoft Corporation MSFT. The deal entails the launch of the Crane Clean Energy Center (CCEC) and the restart of Three Mile Island Unit 1, which was closed five years ago. As per this agreement, Microsoft will source energy from the renewed plant to align its PJM data centers' power use with carbon-free energy, supporting its sustainability goals. Unit 1 is next to TMI Unit 2, which has been shut down since 1979 and is being decommissioned by Energy Solutions. Unit 1 operates independently and was unaffected by the accident. Constellation will also seek a license renewal to extend operations until at least 2054. The CCEC is expected to be operational by 2028. Joe Dominguez, president and, CEO, Constellation said, "Powering industries critical to our nation's global economic and technological competitiveness, including data centers, requires an abundance of energy that is carbon-free and reliable every hour of every day, and nuclear plants are the only energy sources that can consistently deliver on that promise." Constellation purchased TMI Unit 1, in 1999 and was retired for economic reasons in 2019. The plant will be renamed the Crane Clean Energy Center in honor of Chris Crane, who was CEO of Constellation's former parent company. Bobby Hollis, VP of Energy, Microsoft said, "This agreement is a major milestone in Microsoft's efforts to help decarbonize the grid in support of our commitment to become carbon negative. Microsoft continues to collaborate with energy providers to develop carbon-free energy sources to help meet the grids' capacity and reliability needs." Also Read: BlackRock, Microsoft, Others Team Up For $30B Artificial Intelligence Fund: Help US Fuel 'AI Innovation And Economic Growth' U.S. Congressman Scott Perry said, "This critical step forward will ensure Pennsylvania has sufficient baseload power to meet its needs for decades to come while producing 3,400 jobs in our community." Investors can gain exposure to the stock via Strive Natural Resources and Security ETF FTWO and Virtus Reaves Utilities ETF UTES. Price Action: CEG shares are up 12.1% at $233.80 premarket at the last check Friday. Photo by metamorworks via Shutterstock Read Next: This Under-The-Radar Defensive AI Sector Quietly Outperforms All Others, Despite Receiving 'No Love' From Investors Market News and Data brought to you by Benzinga APIs