Operations at Three Mile Island are poised to restart in four years, the latest sign that the nuclear power industry is undergoing a major turnaround after a wave of plant closures.

The Unit 1 reactor at Three Mile Island, which entered service in 1974, was permanently shut down in 2019 due to economic pressure as nuclear power struggled to compete against natural gas. But the tech sector’s growing power needs are breathing new life into the industry.

Constellation Energy plants to restart Unit 1 in 2028 through an agreement with Microsoft to help power the tech company’s data centers. The plant will be renamed the Crane Clean Energy Center — after Chris Crane, the late CEO of the plant’s former owner, Exelon — and its restart is subject to approval by the Nuclear Regulatory Commission.

The Department of Energy said Unit 1 operated safely and efficiently before being shut down five years ago. However, it lies within walking distance of the site of the worst nuclear accident in U.S. history. The Unit 2 reactor suffered a partial meltdown in 1979 and has not operated since the accident. It is being decommissioned by its owner, Energy Solutions.

Constellation’s chief generation officer, Bryan Hanson said Unit 1 is in good condition and the restoration will mostly involve typical maintenance work.

Here is a look at the plant’s main control room, the turbine deck that houses the main power generator, and the facility’s iconic cooling towers. For more on the restart click here.

Main control room

— CNBC’s Danielle DeVries contributed to this report.

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, Exelon, permanently shut down the Unit 1 reactor, citing “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.

Constellation Energy, the plant’s current owner, plans to restart Unit 1 in 2028, subject to monitoring and approval by the Nuclear Regulatory Commission. Constellation, headquartered in Baltimore, spun off from Exelon in 2022; it has the nation’s 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.”

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.

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

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.

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.”

Constellation’s decision to restart Three Mile Island follows Holtec International’s decision to restart its 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 small modular reactors, next-generation technology that promises to make nuclear plants less costly and easier to deploy.

Amazon and 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.

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, 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.

“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 Pennsylvania Building & Construction Trades Council.  

PJM has forecast that 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 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 public hearing Nov. 1.

Federal energy regulators are worried that tech companies’ 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.

Constellation laid out how it plans to restart the plant in the company’s first 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 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.

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.

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 told CNBC in September.