A famous nuclear power plant is coming back online.
Nuclear power stocks are glowing green on Friday, and they have Constellation Energy (CEG 18.23%) to thank for it. This morning, the electric utility giant announced it will restart Unit 1 at the infamous Three Mile Island nuclear power plant to provide electricity to power Microsoft (MSFT -0.33%) data centers.
Nuclear power stocks are surging in response to the news. As of 10 a.m. ET, Constellation stock itself is up a strong 14.4%, while nuclear upstarts NuScale Power Corporation (SMR 9.99%) and Nano Nuclear Energy (NNE 19.52%) have gained 13% and 15%, respectively, and tiny Oklo (OKLO 25.42%) is leading the pack higher with a 16% gain.
Three Mile Island is in the news again
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.
Why Constellation is reopening Three Mile Island
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.
What it means for Constellation, NuScale, Nano Nuclear, and Oklo stocks
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.
There’s also more than a little risk.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Energy and Microsoft. The Motley Fool recommends NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.