Google enters massive power deal with Constellation Energy

Google GOOGL-Q has contracted for 3,590 megawatts of power from Constellation Energy CEG-Q in the largest U.S. power grid, with new nuclear energy accounting for about a quarter of that supply, the companies said on Tuesday.

Constellation will make more than US$4.3-billion of new investments in its fleet as part of the agreement, which involves adding capacity at several of the power company’s nuclear reactors in the Midwest and mid-Atlantic regions, the companies said.

Major tech companies are racing to secure massive amounts of electricity supplies to power data centres across the U.S. by striking unprecedented power deals and reviving the country’s nuclear industry.

Over the last two years, Constellation unveiled an agreement to restart its Three Mile Island reactor in Pennsylvania to serve Microsoft data centres, while Google contracted to restart NextEra Energy’s nuclear power plant in Iowa.

In the latest arrangement, Google entered into a 20-year power purchase agreement for 890 megawatts of electricity from multiple Constellation-owned nuclear power plants, which would be upgraded to produce more electricity from existing reactors.

Electricity from the first of the upgraded plants is expected to be delivered in 2028, the companies said.

Google also entered into a 15-year supply agreement for an additional 2,700 megawatts of power from Constellation in the PJM power grid. That power is not tied to a specific generation source and serves as long-term revenue certainty for Constellation’s operating plants, Google said.

Shares of Constellation were up by more than 13 per cent on Tuesday to US$304.04 by mid-morning.

Maryland-based Constellation is the largest U.S. nuclear power plant operator and owns a major fleet of natural-gas-fired power plants as well as geothermal energy following its acquisition of electricity producer Calpine Corp earlier this year.

“We’re committed to meeting our growth responsibly by actively investing in clean, reliable power that brings new capacity to our nation’s grids,” said Amanda Peterson Corio, Google’s global head of energy and power, in a statement.

The 11 nuclear units expected to be upgraded as part of the arrangement with Google are in Illinois, Pennsylvania, and New Jersey, within the footprint of the largest U.S. electric grid – PJM Interconnection.

Rising electricity demand driven largely by the data centre expansion has contributed to a more than 11-fold increase in PJM capacity prices since 2024 and left the grid with a power shortfall.

In response, PJM management has proposed requiring data centre customers connected to the 13-state grid to either bring their own power or face being shut off from grid power remotely in times of peak demand.

The deal between Google and Constellation is in response to PJM’s “bring your own power” proposal. It also creates a “practical model for how major power consumers can expand new supply alongside growing operational requirements, without state or federal mandates,” the companies said.

Google and Constellation also agreed on a strategic framework that can be replicated to develop power generation, battery storage, and a flexible power use model known as “demand response” in other parts of the US, the companies said.

Joe Dominguez, chairman, president and CEO of Constellation, said the arrangement with Google is a “model for how technology companies and the energy industry can work together to responsibly develop the digital economy and invest in our nation’s energy infrastructure in a way that delivers grid-wide benefits for all, funded by private entities.”