Constellation Energy is pursuing a $1.6 billion federal loan guarantee to help finance its plan to restart the Three Mile Island nuclear power plant in Pennsylvania and sell the electricity exclusively to Microsoft to power the tech giant’s AI data centers.

The Washington Post reports that the owner of the shuttered Three Mile Island nuclear plant is seeking federal taxpayer backing to restart the facility under an unprecedented deal to sell all the power generated to Microsoft. Constellation Energy has applied for a $1.6 billion loan guarantee from the U.S. Energy Department to support its plan to recommission Unit 1 of the plant, which was closed in 2019, according to details of the application obtained by the Post.

If approved, the federal loan guarantee would allow Constellation to shift much of the financial risk of the restart to taxpayers. The government would agree to cover up to $1.6 billion in potential losses if Constellation were to default. Such guarantees are often used to help secure more favorable lending terms for projects deemed to have public benefits. But in this case, the benefits are all for software giant Microsoft.

Microsoft, which has not publicly disclosed financial details of its power purchase agreement with Constellation, is racing to secure zero-emissions electricity to power its rapidly expanding network of data centers. The tech giant is a leader in the high-stakes competition to dominate AI, which requires vast amounts of computing power and energy.

The Three Mile Island restart plan has already sparked debate, with some energy experts questioning the need for additional subsidies on top of federal tax credits Constellation is expected to receive under the Inflation Reduction Act passed in 2022. Those credits alone could be worth nearly $200 million annually.

While Pennsylvania Gov. Josh Shapiro (D) and other political leaders have praised the prospect of reviving Three Mile Island and the carbon-free energy it would generate, critics argue the project carries significant risks for taxpayers.

Even with a federal loan guarantee, some industry analysts doubt Constellation’s claim that it can bring back the plant, the site of America’s worst nuclear accident in 1979, for $1.6 billion and have it online by 2028.

Constellation insists those concerns are overblown, noting it is restarting an existing reactor, not building a new one from scratch like recent nuclear projects that have suffered major delays and cost overruns. The company says it is highly confident it can meet its budget and timeline.

Microsoft declined to comment on the loan guarantee application. Constellation did not explicitly confirm its bid for federal backing when contacted by the Post. But in a statement, the company stressed that it would provide a full repayment guarantee for any taxpayer-backed loan it receives.

The $1.6 billion in financing Constellation is seeking matches what it has estimated it will cost to restart the plant. If that proves insufficient and Microsoft opts out of its contract, Constellation could struggle to find other buyers willing to pay a premium for the power – leaving taxpayers potentially on the hook.

Read more at the Washington Post here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.