$16B PJM Capacity Shock Ignites $1.5B Nuclear Restart & SMR Deals

A $16 billion capacity auction result and a 15–20% electricity demand surge have turned nuclear power from a sideline into a major asset class. Big tech's $1.5 billion Three Mile Island restart and long‑term SMR offtake deals are rewriting how data center operators secure reliable, inflation-protected power.

The electricity appetite of America's data centers reached 183 terawatt-hours (TWh) in 2025, surpassing the entire annual consumption of Ohio and marking a pivotal moment for the nation's energy infrastructure. As the International Energy Agency tracks demand growth accelerating at 15 to 20 percent annually, driven largely by the expansion of artificial intelligence workloads, the North American Electric Reliability Corporation (NERC) has issued stark warnings about supply shortages across much of North America. The PJM Interconnection, managing the grid for 13 states and Washington, D.C., now forecasts data center expansions that have pushed its capacity auction costs to a staggering $16 billion—a direct signal that the existing grid cannot keep pace without radical solutions.

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A $16 billion capacity auction result and a 15–20% electricity demand surge have turned nuclear power from a sideline into a major asset class.

Silicon Valley's response has been swift and capital-intensive: a nuclear renaissance funded by the very tech companies whose AI ambitions are straining the system. Microsoft has emerged as a frontrunner, committing more than $1.5 billion to restart Pennsylvania's iconic Three Mile Island nuclear plant through a partnership with Constellation Energy, the nation's largest nuclear operator. That deal, backed by a $1 billion federal loan from the U.S. Department of Energy, represents a landmark fusion of private capital and public support. Meanwhile, OpenAI is building new data center capacity in Ohio in collaboration with Oracle, Blackstone, and Related Digital, while Microsoft expands its Illinois footprint. Meta secured a 20-year power purchase agreement with Constellation, and Google signed a corporate agreement with Kairos Power to purchase up to 500 megawatts from a fleet of advanced small modular reactors (SMRs). Amazon, too, has been expanding its partnership agreements, underscoring an industry-wide pivot toward direct energy procurement.

This shift is not a tentative experiment but a structural realignment. John Moura, NERC's director of reliability assessments, emphasized the critical role of existing nuclear infrastructure: “Existing nuclear plant life extensions and select plant restarts can provide meaningful reliability benefits because the infrastructure largely already exists.” The magnitude of investment signals that big tech is prepared to bypass traditional utility procurement models, directly financing generation assets to secure round-the-clock, carbon-free electricity. The implications extend beyond corporate balance sheets; they could reshape utility regulation, competitive markets, and the pace of decarbonization.

The Department of Energy is fueling the momentum on the supply side by backing SMRs—compact, factory-built reactors that promise faster and cheaper deployment than conventional gigawatt-scale plants. The DOE selected the Tennessee Valley Authority and Holtec as the first recipients of $400 million each to advance SMR deployments, creating a bridge between federal R&D and private sector demand. These awards aim to accelerate a technology that has languished for years due to cost overruns and regulatory hurdles, but now finds a ready market in hyperscale data center operators desperate for reliable, clean baseload power.

The consequences will ripple through energy markets and the economy. For grid operators, the influx of nuclear power—whether from restarted legacy plants or new SMRs—could alleviate the resource adequacy crunch that has sent PJM capacity prices soaring. Power market analysts are reevaluating long-term price forecasts, as tech offtake agreements provide revenue certainty that traditional utility rate cases often lack. Constellation Energy, for example, stands to benefit substantially from the Three Mile Island restart and new long-term contracts, while newcomer Kairos Power gains a validation that could unlock further venture funding for advanced reactor designs.