Constellation Energy (CEG) shares jumped in early trading on Oct. 6 after the company announced a major power deal with Alphabet's (GOOG) (GOOGL) Google. Under a 20-year agreement, Google will support 890 megawatts of new nuclear capacity on the PJM grid. Constellation will unlock that power by upgrading equipment at 11 of its existing reactors in Illinois, Pennsylvania, and New Jersey. It plans to invest more than $4.3 billion, with the first upgrade expected by 2028. The companies also signed a separate 15-year agreement covering another 2,700 megawatts from Constellation’s existing PJM fleet. In total, Google has contracted for about 3,590 megawatts of power. The deal follows a similar 20-year agreement Constellation signed with Amazon (AMZN) on Sept. 30.
The power challenge facing AI is not only about how quickly new data centers can be built. Hyperscalers also need electricity that is carbon-free, reliable, and available at the scale their expanding AI infrastructure requires. Constellation Energy owns the largest fleet of nuclear power assets, directly addressing those energy needs. As reliable, carbon-free electricity becomes more difficult to obtain at scale, the limited supply of nuclear generation is becoming an increasingly important part of the company’s investment story.
