Microsoft's Potential Contract for Nuclear Energy May Burden Taxpayers with a $1.6 Billion Federal Loan
In an attempt to power its aspiring artificial intelligence operations, massive in energy consumption, Microsoft has aimed to resurrect a closed nuclear power plant in Pennsylvania. AI has a remarkable appetite for energy, and the industry has suggested nuclear power as a plausible solution for its energy demands. Back in September, Microsoft signed an agreement to revitalize the Three Mile Island power plant, which has been dormant since 2019, and has an ominous past being the location of the most severe nuclear incident in United States history, which took place in 1979. New information indicates that Microsoft and its business associate are hoping for American taxpayers to shoulder a portion of the financial implications associated with the plant's revival.
The Washington Post reveals that Constellation Energy, the utility company responsible for operating Three Mile Island's reactor, submitted an application for a $1.6 billion loan guarantee to the U.S. Department of Energy in May. The report suggests that the application has already undergone an initial examination and is presently in negotiations for specifics of the agreement. A loan guarantee would provide federal monetary support for the contract, regardless of its success or failure.
The initiative's controversy stems from the possibility that it could shift billions of dollars of financial risk onto the taxpayers' shoulders. Should anything go awry with the business arrangement or if Constellation defaults on its obligations, the government could still be compelled to cover up to $1.6 billion in expenses, as reported by the newspaper. Constellation swiftly declared that such a situation would not materialize.
“Take comfort in knowing that, should we pursue a loan, Constellation promises full repayment,” Constellation told the Post. “Any speculation that taxpayers are shouldering danger here is pure fantasy, given that any loan would be backed by Constellation’s entire $80-billion-plus valuation.”
The Post reached out to Constellation and Microsoft for comment.
The project has already profited from several federal tax credits (with potential annual benefits of up to $200 million for both companies, as reported by the Post), indicating government support for the venture. The U.S. Energy Secretary has even praised the endeavor, claiming the government is optimistic about it.
Some critics have pointed out that while the majority of nuclear power projects rely on federal subsidies, this particular project is predominantly financed by Microsoft, with Microsoft serving as the primary recipient of the plant's services. Other perspectives posit that the deal will likely require further federal funding as it progresses. “The $1.6 billion is merely the beginning,” Stanford University's Mark Jacobson told The New Republic. “Microsoft will seek for additional government handouts, much like how other owners of aged nuclear reactors in numerous states have requested in the past.”
If finalized, the Three Mile Island reactor would be reactivated by 2028. Microsoft would then enter into a 20-year contract with Constellation, affording it 100% ownership over the plant's output during this period.
The tech giant Microsoft and its associates are exploring the use of nuclear power, a potential solution for energy-hungry AI technology in the tech's future, as suggested in the agreement to revitalize the Three Mile Island power plant. The revival of the plant, if successful, could significantly reduce Microsoft's energy costs, aiding its AI operations that have a remarkable appetite for energy.
