A nuclear reactor at the notorious Three Mile Island site in Pennsylvania is to be activated for the first time in five years after its owners, Constellation Energy, struck a deal to provide power to Microsoft’s proliferating artificial intelligence operations.

The plant was the location of the most serious nuclear meltdown and radiation leak in US history, in March 1979 when the loss of water coolant through a faulty valve caused the Unit 2 reactor to overheat. More than four decades later, the reactor is still in a decommissioning phase.

Constellation closed the adjacent but unconnected Unit 1 reactor in 2019 for economic reasons, but will bring it back to life after signing a 20-year power purchase agreement to supply Microsoft’s energy-hungry data centers, the company announced on Friday.

The restart, the first time a nuclear reactor in the US has been recommissioned after closure, will send an additional 835 megawatts of power to the Pennsylvania grid, create 3,400 jobs and contribute at least $16bn to the state’s economy, Constellation said.

As part of the agreement, Three Mile Island will also be renamed the Crane Clean Energy Center to recognize Chris Crane, the former chief executive of Constellation’s parent company.

“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 with a new name and a renewed mission,” Joe Dominguez, the president and current chief executive of Constellation, said.

Significant investment will be required to restore the plant, including replacing or refurbishing the turbine, generator, main power transformer and cooling and control systems, Dominguez said.

There will also be a comprehensive safety and environmental review by the US Nuclear Regulatory Commission before it issues a permit for the restart of the reactor, which is scheduled to be online sometime in 2028. Constellation said it would seek licenses that will extend plant operations to at least 2054.

Tech giants including Microsoft, Google, Amazon, Meta and Apple are consuming ever-greater amounts of energy to power the boom in artificial intelligence. According to Goldman Sachs, demand will grow 160% by 2030, when data centers are expected to account for 8% of the power generated in the US.

With the spike in demand, however, comes rising concerns over the impact on the environment. An analysis by the Guardian published this week found that data center emissions of four of the biggest tech companies, Google, Microsoft, Meta and Apple, are probably about 662% – or 7.62 times – higher than officially reported.