Constellation Energy has announced deals with Google and Amazon over the past week to upgrade existing nuclear plants.
Big tech companies are looking to squeeze more power out of existing plants because it is cheaper and quicker than building new energy capacity.
New power will be added in the PJM Interconnection electric grid, which desperately needs more supply as data center demand surges.
Alphabet ‘s Google division will squeeze additional nuclear power equivalent to one large reactor from almost a dozen existing plants in a region of the country that desperately needs more electricity to keep up with surging demand from data centers. Constellation Energy signed a deal with Google on Tuesday to bring 890 megawatts of additional capacity to the largest electric grid in the U.S., PJM Interconnection . That’s enough electricity to power more than 600,000 homes, based on average U.S. electricity consumption in 2022. The power will come from investments in 11 nuclear plants in Illinois, Pennsylvania and New Jersey. The upgrades include modernizing turbines, steam generators and control systems. Shares of Constellation, the largest operator of nuclear plants in the U.S., soared 15% after the agreement Tuesday. The big technology companies are increasingly turning to this approach, called uprates, because it’s cheaper and quicker than building new nuclear plants , as well as next generation technologies like small modular reactors that remain unproven at commercial scale. PJM needs the power. The grid, which supplies and coordinates wholesale power across 13 states and the District of Columbia, faces major challenges as demand, particularly from data centers, outstrips available supply. Meanwhile, the process to connect new power can take years. As a consequence, power costs have exploded throughout the PJM, which covers more than 65 million people, primarily in the Mid-Atlantic and Midwest. Who benefits Constellation’s deal with Google is the second agreement in a week after it reached a deal with Amazon last week to add 190 megawatts to its Calvert Cliffs plant, the only nuclear plant in Maryland. The tech sector favors nuclear because it provides reliabl power for data centers while not emitting carbon dioxide. The Constellation deals are positive for other independent power producers with nuclear plants that are also candidates for uprates, said Nicholas Amicucci, analyst at Evercore ISI, in a note to clients on Tuesday. Shares of Vistra and Talen Energy were up more than 9% Tuesday in sympathy. Tech deals to uprate nuclear plants are also positive for uranium enrichers, including Centrus Energy , due to increased demand for fuel, the Evercore analyst said. Centrus shares rallied more than 7% Tuesday. Tech is also turning to uprates because almost all of the closed nuclear plants that are realistic candidates to reopen have largely been contracted. Constellation, for example, is reopening Three Mile Island through an agreement with Microsoft ; NextEra Energy is restarting the Duane Arnold plant in Iowa through a deal with Google; and privately-held Holtec is reviving the Palisades facility in Michigan, along with local partners. Evercore has estimated that “economically justified” uprates to the existing fleet could add 4 to 8 gigawatts of additional nuclear power by the mid-2030s, equivalent to 4 to 8 large reactors.
