Microsoft's Premium Deal with Constellation for Three Mile Island Power Agreement

Microsoft may pay Constellation premium in Three Mile Island power agreement, Jefferies says (Sept 23)

Rising demand for electricity from data centers to power AI technology has created a need for clean and sustainable sources of energy such as nuclear power. Microsoft signed a deal with Constellation to help it restart a unit of its Three Mile Island nuclear plant, the companies said on Friday, sending the utility firm's shares up 22%. The Unit 1 which Constellation hopes to restart at the Three Mile Island power facility was shut down in 2019 due to economic reasons. No U.S. nuclear power plant has been reopened after shutting. A separate unit of the plant was shut down in 1979 after experiencing a partial meltdown, in one of the biggest commercial nuclear accidents in U.S. history. Jefferies estimated that Microsoft might pay Constellation about $110-$115 per megawatt hour (MWh) as part of the 20-year-long fixed price PPA. The brokerage's analysts said the estimated cost represents a significant premium to market expectations, which are in the low $100 per MWh for a collocated deal. "Customers are willing to pay material premiums for virtual nuclear deals. This considerably increases the amount of volume for sale at robust levels," Jefferies analysts said in a note. (Reporting by Vallari Srivastava in Bengaluru; Editing by Alan Barona)

Microsoft may pay Constellation premium in Three Mile Island power agreement, Jefferies says (Sept 23)

(Corrects paragraph four in Sept. 23 story to say Unit 1 was shut down due to "economic reasons," not "operational issues") (Reuters) -Microsoft is estimated to pay Constellation Energy a premium as part of a long-term power purchase agreement (PPA) related to the Three Mile Island nuclear plant in Pennsylvania, Jefferies analysts said on Monday. Rising demand for electricity from data centers to power AI technology has created a need for clean and sustainable sources of energy such as nuclear power. Microsoft signed a deal with Constellation to help it restart a unit of its Three Mile Island nuclear plant, the companies said on Friday, sending the utility firm's shares up 22%. The Unit 1 which Constellation hopes to restart at the Three Mile Island power facility was shut down in 2019 due to economic reasons. No U.S. nuclear power plant has been reopened after shutting. A separate unit of the plant was shut down in 1979 after experiencing a partial meltdown, in one of the biggest commercial nuclear accidents in U.S. history. Jefferies estimated that Microsoft might pay Constellation about $110-$115 per megawatt hour (MWh) as part of the 20-year-long fixed price PPA. The brokerage's analysts said the estimated cost represents a significant premium to market expectations, which are in the low $100 per MWh for a collocated deal. "Customers are willing to pay material premiums for virtual nuclear deals. This considerably increases the amount of volume for sale at robust levels," Jefferies analysts said in a note. (Reporting by Vallari Srivastava in Bengaluru; Editing by Alan Barona)

Microsoft may pay Constellation premium in Three Mile Island power agreement, Jefferies says

(Reuters) - Microsoft is estimated to pay Constellation Energy a premium as part of a long-term power purchase agreement (PPA) related to the Three Mile Island nuclear plant in Pennsylvania, Jefferies analysts said on Monday. Rising demand for electricity from data centers to power AI technology has created a need for clean and sustainable sources of energy such as nuclear power. Microsoft signed a deal with Constellation to help it restart a unit of its Three Mile Island nuclear plant, the companies said on Friday, sending the utility firm's shares up 22%. The unit Constellation hopes to restart at the Three Mile Island power facility was shut down in 2019 due to operational issue. No U.S. nuclear power plant has been reopened after shutting. A separate unit of the plant was shut down in 1979 after experiencing a partial meltdown, in one of the biggest commercial nuclear accidents in U.S. history. Jefferies estimated that Microsoft might pay Constellation about $110-$115 per megawatt hour (MWh) as part of the 20-year-long fixed price PPA. The brokerage's analysts said the estimated cost represents a significant premium to market expectations, which are in the low $100 per MWh for a collocated deal. "Customers are willing to pay material premiums for virtual nuclear deals. This considerably increases the amount of volume for sale at robust levels," Jefferies analysts said in a note. (Reporting by Vallari Srivastava in Bengaluru; Editing by Alan Barona)

Microsoft to pay Constellation premium in Three Mile Island power agreement

Microsoft is estimated to pay Constellation Energy a premium as part of a long-term power purchase agreement (PPA) related to the Three Mile Island nuclear plant in Pennsylvania, Jefferies analysts said on Monday. Rising demand for electricity from data centers to power AI technology has created a need for clean and sustainable sources of energy such as nuclear power. Click here to connect with us on WhatsApp Microsoft signed a deal with Constellation to help it restart a unit of its Three Mile Island nuclear plant, the companies said on Friday, sending the utility firm's shares up 22 per cent. The unit Constellation hopes to restart at the Three Mile Island power facility was shut down in 2019 due to operational issue. No US nuclear power plant has been reopened after shutting. A separate unit of the plant was shut down in 1979 after experiencing a partial meltdown, in one of the biggest commercial nuclear accidents in US history. Jefferies estimated that Microsoft might pay Constellation about $110-$115 per megawatt hour (MWh) as part of the 20-year-long fixed price PPA. More From This Section Asia stocks steady ahead of RBA decision, Governor Kazuo Ueda's speech Boeing crisis sparks US FAA to revamp safety programmes to avoid risks Boeing offers its largest union 30% wage hike in bid to end strike Can the new French govt solve New Caledonia crisis after months of unrest? Ex-Twitter worker wins fight with Elon Musk over unpaid severance The brokerage's analysts said the estimated cost represents a significant premium to market expectations, which are in the low $100 per MWh for a collocated deal. "Customers are willing to pay material premiums for virtual nuclear deals. This considerably increases the amount of volume for sale at robust levels," Jefferies analysts said in a note. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.) Also Read Microsoft allows users to customise Copilot key on Windows 11 beta Microsoft launches new unified app to connect to Windows across platforms Microsoft prez warns of possible meddling in final 48 hours of US elections Blackrock, Microsoft join hands to raise $30 billion for AI investments Microsoft plans new $60 billion buyback, raises quarterly dividend 10%

Microsoft's Three Mile Island Deal Isn't a Nuclear Revival -- Yet

When the Three Mile Island nuclear plant became (in)famous in 1979 for a reactor accident, Microsoft Corp. was a baby, still a year away from a landmark deal with International Business Machines Corp. that would pave the way for the Windows revolution. So Microsoft's latest landmark deal, to revive the plant's other reactor to power its artificial-intelligence ambitions, positively drowns in symbolism. The longed-for nuclear renaissance has finally met its transcendent moment -- or has it? The debated US nuclear revival conflates two things. One is keeping open the existing fleet, much of which was built in the 1970s and 1980s and began suffering mostly cost-related shutdowns over the past decade. The other concerns building genuinely new plants, an event rarer than total eclipses these days. Microsoft's deal hews more to the former. It has agreed to buy 20 years' worth of output at a fixed price, providing Constellation Energy Corp., the owner, enough certainty to spend $1.6 billion to put the reactor in Pennsylvania, which closed for economic reasons in 2019, back into service by 2028.

Microsoft's AI Uses So Much Energy That It Could Bring Infamous Nuclear Plant Back Into Service

Three Mile Island, the site of the nation's most serious nuclear reactor accident, could reopen with Microsoft as its sole customer. The site of the worst nuclear accident in US history could come back into service by 2028 to power Microsoft's data center energy needs, including artificial intelligence. According to a purchasing agreement between Microsoft and Constellation Energy, a nuclear reactor at Three Mile Island in Pennsylvania that went offline five years ago would be reactivated. The reactor, dubbed Unit 1, is close to Unit 2, which famously experienced a partial meltdown in 1979 in an incident that cooled enthusiasm for nuclear power in the US for decades. Pending Nuclear Regulatory Commission approval, the plant would resume operations starting in 2028 and, under a 20-year agreement, would provide energy solely to Microsoft. Constellation said in a press release that it hopes to extend operations there until at least 2054 and that the reactor would generate an additional 800 megawatts of electricity and add 3,400 jobs to the economy. A representative for Microsoft pointed to a company blog post about the progress of the company's energy and sustainability initiatives. Constellation says the Unit 1 reactor closed in 2019 for economic reasons and was previously generating 837 megawatts, enough to power more than 800,000 homes. The plant will be named Crane Clean Energy Center in honor of Constellation parent company Exelon's former CEO Chris Crane, who died in 2022. Microsoft says it's using the carbon-free energy to help meet its environmental goals. "This agreement is a major milestone in Microsoft's efforts to help decarbonize the grid in support of our commitment to become carbon negative," Bobby Hollis, Microsoft's vice president of energy, said in the release. "Microsoft continues to collaborate with energy providers to develop carbon-free energy sources to help meet the grids' capacity and reliability needs." The release does not specifically mention AI, but Microsoft's new efforts in this area have jeopardized its carbon emission goals for 2030, and the agreement might be one way Microsoft is addressing those power needs. The company's latest sustainability report showed a 30% jump in carbon emissions from 2020 to 2023. The companies did not disclose financial terms of the energy deal.