Oracle is planning to use nuclear energy to power its massive Wisconsin data center project under an agreement that could shift about $300 million in energy costs away from the state’s utility customers.

The deal highlights a tough challenge for AI data center developers: finding enough electricity to support data centers without pushing the costs onto other utility customers.

Under the proposed arrangement with We Energies, Oracle would subscribe to 125 to 250 megawatts of electricity generated by the Point Beach Nuclear Plant, or about 10% to 20% of the plant’s output.

The electricity would help power Project Lighthouse, the data center campus Oracle is developing with OpenAI in Port Washington, Wisconsin.

Point Beach is Wisconsin’s only operating nuclear power plant and a major source of carbon-free electricity. But its power is relatively costly. We Energies’ fuel expenses are approximately twice those of sibling utility Wisconsin Public Service Company, with the Point Beach nuclear contract accounting for much of that difference.

We Energies owned Point Beach until 2007, when it sold the facility to NextEra Energy while retaining an agreement to purchase most of its electricity. The current contract runs through 2033. We Energies has also agreed to purchase approximately 86% of Point Beach’s power under a new 20-year arrangement.

Concern Among Electricity Customers

The costs tied to Point Beach have become an issue for Wisconsin electricity customers. The nuclear power agreement accounts for about 20% of We Energies’ proposed $176 million electric rate increase for 2027. The price paid per megawatt-hour under the contract is expected to roughly double between 2009 and 2027, with annual increases of 6% to 8% through 2033.

By taking a significant portion of the plant’s output, Oracle could save approximately $300 million in fuel costs from We Energies customers over five years. More than 1 million utility customers could benefit from the arrangement.

Oracle claims Project Lighthouse will generate more than $11 billion for the local economy, support more than 4,000 skilled construction jobs over three years and create 1,000 ongoing operations jobs. The company has also pledged to cover the data center project’s energy costs rather than passing them along to ratepayers.

Power supply is becoming a critical issue as Wisconsin attracts more data center development. A draft report from the state’s Public Service Commission projected that peak electricity demand could climb 40% over five years, driven largely by new data centers in Port Washington, Mount Pleasant and Beaver Dam.

We Energies is preparing for that higher demand with additional generation. The utility has separately asked regulators for approval to build a natural gas plant at its Fox Energy Center site in Outagamie County, a project that would more than double electricity production at the facility.

For Oracle, the project is part of a much larger system of data centers. The company operates more than 50 data centers across 28 countries and expects to spend $95 billion on capital expenditures this year.