Microsoft is taking the power demands of its data centers seriously. You’ve probably heard the news that it has signed a deal with Constellation to get nuclear-generated electricity from the Three Mile Island power plant in Pennsylvania.
The terms of the deal – Microsoft is committing to buy every bit of electricity that the Three Mile Island plant can generate for the next 20 years.
Restarting Three Mile Island is not as tall a task as you might think. The undamaged reactor was operational as recently as 2019. Constellation shut it down because it wasn’t economically viable. But the economics have changed dramatically in just the last few months…
Constellation says it will cost around $1.6 billion in repairs and upgrades to restart the reactor. In exchange Microsoft will pay $16 billion for the next 20 years of its output. $800 million a year…
That’s a pretty good deal for Constellation. And given the scramble to lock in massive amounts of electrical supply, Microsoft clearly thinks it’s a pretty good deal too…
Microsoft is no stranger to paying up for long-term energy supply deals. Back in May, Microsoft paid $10 billion to Brookfield Renewable (NYSE: BEP) for 10.5 gigawatts of power to be delivered between 2026 and 2030.
Both of these supply deals are among the biggest ever made…
That’s a Big Deal
Constellation shares are up $44 (21%) on the news. Vistra (NYSE: VST) up 15% to $107. NuScale Power (NYSE: SMR) up 9%. Nano Nuclear (Nasdaq: NNE) up 18%. Oklo is up 21%. Uranium miner Cameco (NYSE: CCJ) up 7%. America’s only uranium enrichment company Centrus (NYSE: LEU) up 8%.
None of this should come as a surprise. We told you Constellation was planning to reopen Three Mile Island back in June. Hammer and I have talked about all of these stocks in the last few months, most recently on Monday(!) when I told you that Vistra, NuScale and Nano Nuclear were all rate-cut trades.
It may seem like these deals are one-offs. They are not. More supply deals will be signed (that’s why Vistra is up so much). Small Modular Reactor technology will be in play, good for NuScale and Oklo.
New reactors will mean more uranium demand (CCJ) and enrichment (LEU)…
The power bull market is just getting started…
Cheers,
Briton Ryle
Chief Investment Strategist
Outsider Club
X/Twitter: https://twitter.com/BritonRyle
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