Google (GOOGL.US) buys $4.3 billion to lock in Constellation Energy (CEG.US) 3,590 megawatts of long-term energy

The Zhitong Finance App learned that Google (GOOGL.US) has signed a contract with Constellation Energy (CEG.US), the largest power grid operator in the US, to purchase 3,590 megawatts of electricity, of which new nuclear power accounts for about a quarter of this supply.

The two companies said the agreement will bring more than $4.3 billion in additional investment to Constellation and involve the expansion of the power company's multiple nuclear reactors in the Midwest and Mid-Atlantic regions.

Major technology companies are scrambling to lock in massive electricity supplies across the US to power data centers, and have reached unprecedented agreements with American Electric Power.

In the past two years, Constellation announced an agreement to restart the Three Mile Island nuclear reactor in Pennsylvania to service Microsoft's data center, while Google signed an agreement to restart NextEra Energy's nuclear power plant in Iowa.

In the latest package, Google signed a 20-year power purchase agreement to purchase 890 megawatts of electricity from several Constellation nuclear power plants, which will be upgraded to produce more electricity from existing reactors.

The two companies said electricity for the first upgraded power plant is expected to be delivered in 2028.

Google also signed a long-term supply agreement to purchase an additional 2,700 megawatts of electricity from Constellation in the PJM region. Google said that this portion of electricity is not tied to a specific source of power generation and provides long-term revenue certainty for power plants operated by Constellation.

Constellation, headquartered in Maryland, is the largest nuclear power plant operator in the US and has a large fleet of gas power plants.

Amanda Peterson Corio, Google's global head of energy and power, said in a statement, “We are committed to responsibly meeting our own growth, actively investing in clean and reliable electricity, and bringing additional production capacity to our power grid.”

As part of the agreement with Google, the 11 nuclear power units expected to be upgraded are located in Illinois, Pennsylvania, and New Jersey, within the coverage of PJM Interconnection, the largest power grid in the US.

PJM management proposed requiring data center customers connected to 13 state grids to either bring their own electricity or face the risk of being remotely cut off from the grid during peak electricity consumption periods.

The two companies said the agreement between Google and Constellation was a response to PJM's “bring your own power supply” proposal.