A Three Mile Island nuclear reactor is set to come back online after more than five years under a new deal between Microsoft (MSFT) and Constellation Energy (CEG). The announcement on Friday boosted shares of the Baltimore-based energy provider by as much as 17 per cent, setting a fresh 52-week high.

Pennsylvania’s Three Mile Island is notorious for one of the worst commercial nuclear accidents in U.S. history, following a partial meltdown of the Unit 2 reactor in 1979. The deal between Microsoft and Constellation would restart the neighbouring but fully independent Unit 1 reactor, which was shut down for economic reasons in 2019.

In a news release on Friday, Constellation says the power purchase deal with the tech giant is its largest ever, aiming to provide upwards of 800 megawatts to the grid when a planned energy centre comes online in 2028. For Microsoft, the agreement secures emissions-free power to help match demand in the region from its increasingly power-hungry data centres, as the company pushes harder into artificial intelligence.

“Powering industries critical to our nation’s global economic and technological competitiveness, including data centres, requires an abundance of energy that is carbon-free and reliable every hour of every day, and nuclear plants are the only energy sources that can consistently deliver on that promise,” Constellation president and CEO Joe Dominguez stated in a news release.

“Before it was prematurely shuttered due to poor economics, this plant was among the safest and most reliable nuclear plants on the grid, and we look forward to bringing it back.”

Constellation says this requires U.S. Nuclear Regulatory Commission approval, following a comprehensive safety and environmental review, as well as permits from relevant state and local agencies.

Microsoft, along with rivals Alphabet (GOOG)(GOOGL) and Amazon (AMZN), are among the top corporate buyers of renewable energy from wind and solar. In May, Microsoft announced a deal with Canada’s Brookfield Asset Management (BAM.TO) for more than 10.5 gigawatts of renewable energy capacity in the U.S. and Europe starting in 2026.

"This agreement is a major milestone in Microsoft's efforts to help decarbonize the grid in support of our commitment to become carbon negative,” Bobby Hollis, Microsoft’s vice-president of energy, stated in Friday’s news release.

Expectations of growing demand for nuclear fuel have sent uranium prices to their highest levels since the early 2000s, as the mining industry forecasts a shortfall of supply.

Meanwhile, companies including Enbridge (ENB.TO)(ENB) and TC Energy (TRP.TO)(TRP) have presented natural gas as a solution to the 24-7 energy needs of data centres.

Nasdaq-listed Constellation Energy shares rose 14.21 per cent to $238.14 as at 10:55 a.m. ET on Friday. Microsoft’s stock dipped 0.81 per cent to $435.14.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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