Key Points
- Constellation Energy recently entered agreements with Google and Amazon to upgrade its existing nuclear facilities.
- Technology firms are pursuing greater output from existing plants, as it is more cost‑effective and faster than constructing new generation capacity.
- The additional capacity will be integrated into the PJM Interconnection grid, which urgently requires more supply to meet rising demand from data centers.
Alphabet’s Google division will obtain nuclear power equivalent to that produced by a large reactor from nearly a dozen existing plants located in a region where electricity demand is outpacing supply due to expanding data‑center consumption. On Tuesday, Constellation Energy entered into an agreement with Google to add 890 MW of capacity to the PJM Interconnection, the nation’s largest electric grid. This amount can supply more than 600,000 households based on 2022 U.S. average electricity use. The capacity will be derived from upgrades to 11 nuclear reactors in Illinois, Pennsylvania and New Jersey, involving modernization of turbines, steam generators and control systems. Constellation’s shares increased by roughly 15 % after the announcement. Technology companies are increasingly adopting uprates—retrofits that boost output from existing reactors—because they are less expensive and faster than constructing new reactors or pursuing unproven advanced technologies such as small modular reactors. PJM requires additional generation, and the grid, which coordinates wholesale power across 13 states and the District of Columbia, is confronting significant supply‑demand challenges as data‑center demand accelerates. Connecting new generation can require many years, contributing to rising power costs across the PJM region, which serves over 65 million people, primarily in the Mid‑Atlantic and Midwest. The Google agreement follows a separate deal with Amazon last week that added 190 MW to the Calvert Cliffs plant, the only nuclear facility in Maryland. Nuclear power is valued by the technology sector for its reliable, carbon‑free electricity supply for data centers. The Constellation agreements benefit other independent nuclear operators that may also pursue uprates, according to Nicholas Amicucci, an analyst at Evercore ISI, who noted the positive market reaction. Shares of Vistra and Talen Energy rose more than 9 % on Tuesday, reflecting the market’s optimism. Uprating nuclear assets also boosts demand for uranium enrichment services, supporting companies such as Centrus Energy, whose stock gained over 7 % on Tuesday. Evercore estimates that economically justified uprates across the existing fleet could add 4 to 8 GW of nuclear capacity by the mid‑2030s, equivalent to four to eight large reactors.
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