Constellation Secures $1B Federal Loan to Restart Three Mile Island, Shares Jump

What happened

Constellation Energy shares rallied after the company disclosed it has obtained a federal loan commitment of up to $1 billion to restart the shuttered nuclear reactor at Pennsylvania’s Three Mile Island. The announcement positions Constellation as a high-profile beneficiary of the Trump administration’s renewed push to expand U.S. nuclear generation. The move builds on a previously outlined DOE-backed restart path for the site (branded as the Crane Clean Energy Center), which management has framed as a key lever to meet rising demand for 24/7 carbon-free power from data centers and large enterprises. By securing low-cost federal financing, Constellation significantly reduces capital-structure and funding risk around the project while preserving balance-sheet flexibility for other priorities, including the pending Calpine acquisition. Nonetheless, the restart remains subject to regulatory, licensing, and execution milestones, meaning the financial contribution will phase in over several years rather than provide an immediate earnings step-change.

Implication

For investors, the $1 billion federal loan sharply lowers funding and cost-of-capital risk for the Three Mile Island restart, increasing the likelihood that an additional large, baseload nuclear unit will be returned to service and contribute to earnings and cash flow over the medium term. The project is strategically consistent with Constellation’s moat—leveraging its nuclear operations expertise and growing demand for 24/7 carbon-free power—and underscores the company’s strong alignment with a pro-nuclear U.S. policy environment. However, the timing, total capex, and regulatory pathway for the restart remain uncertain, so the near-term financial impact is limited and subject to potential delays or cost overruns. In valuation terms, this development incrementally supports the current premium multiple by adding higher-visibility, policy-supported growth, but it does not fully compensate for existing concerns around cash-flow volatility, negative interest coverage, and the leverage/integration risk associated with the Calpine acquisition. Practically, existing holders can view the news as a positive reinforcement of the long-term nuclear thesis, while prospective investors may still prefer to await either a better entry point or clearer evidence of execution on both Three Mile Island and Calpine integration before adding exposure.

Thesis delta

The news strengthens the existing thesis that Constellation can unlock additional value from nuclear life extensions and restarts under a supportive federal policy regime by reducing financing risk and increasing the probability that Three Mile Island returns to service. This incrementally improves long-term growth and cash-flow visibility from the nuclear fleet, but does not resolve key watch items around sustained free-cash-flow generation, interest-coverage improvement, and Calpine-related execution risk. As a result, the rating bias becomes slightly more constructive within a HOLD view, contingent on follow-through on project milestones and balance-sheet discipline.