Google signs 20-year deal to fund 890 megawatts of new nuclear output at Constellation plants

Google agreed on Tuesday to buy the extra power from upgrades at 11 of Constellation Energy's nuclear reactors for 20 years, giving the largest U.S. nuclear operator the long-term revenue it needs to spend more than $4.3 billion squeezing about 890 megawatts of new output from plants that are already running.

None of that capacity exists yet. Constellation expects the first upgrade to be delivered by 2028, and Google says all 890 megawatts should reach the grid before the end of 2032. The companies say that is roughly the output of one large new reactor, added years sooner than building one. They did not disclose what Google will pay for the power.

What Google is buying

The core of the deal is a 20-year power purchase agreement tied to new output at 11 reactors on six sites in Illinois, Pennsylvania and New Jersey. The technique is called an uprate: replacing or modernizing turbines, steam generators and digital control systems so an existing reactor can produce more electricity. Constellation says that avoids the long build times and grid-connection queues that hold up new power plants.

Alongside it, the companies signed a separate 15-year supply agreement covering 2,700 megawatts from Constellation's existing plants in the PJM Interconnection, the grid that spans 13 states across the Mid-Atlantic and Midwest and serves about 67 million people. Constellation said that contract keeps operating plants economically viable without taking their output off the grid.

The agreement also includes demand-response terms to curtail non-critical power use during high-stress grid events. And Constellation expanded a five-year technology agreement under which it will use Google Cloud and its Gemini Enterprise AI tools to plan uprates, manage outages and secure its plant networks. The two companies set up a framework to look at further clean generation, storage and demand-response projects, starting in PJM.

At more than $4.3 billion for 890 megawatts, Constellation's planned spending works out to roughly $4.8 million per megawatt of new capacity, by TickerGrove's calculation. The companies say the work will sustain about 4,400 existing jobs and create about 7,200 construction jobs.

Who pays for the upgrades

The companies aimed their pitch as much at regulators and household customers as at investors, stressing that Google, not other grid customers, is funding the work. They called the deal a direct response to PJM's "Bring Your Own Power" proposal, which they describe as a model for large users adding new supply as their own demand grows, and said Google would not pass the costs on to residential customers. Google said other customers on the grid would bear none of the costs of the upgrades.

"Our agreement with Constellation to fund nuclear reactor uprates will strengthen the PJM grid, which serves 67 million people, all while protecting energy affordability and supporting local union jobs," Amanda Peterson Corio, Google's global head of energy and power, said in the joint release.

Joe Dominguez, Constellation's chief executive, said "preserving and expanding the output of the existing nuclear fleet and developing new clean generation is critical to meeting our nation's growing energy needs while keeping costs affordable for homes and businesses."

A second big-tech deal in a week

Constellation signed a similar agreement with Amazon on Sept. 30. That 20-year deal at the Calvert Cliffs plant in Maryland covers 690 megawatts, including about 190 megawatts of new capacity from an uprate due between 2030 and 2032, alongside more than $3 billion of investment across the plant. The Google deal adds more than four times as much new capacity. The Wall Street Journal reported that it is the largest agreement yet to raise output at existing reactors.

For Google, it lifts the new nuclear capacity the company has backed through uprates and restarts of existing plants to more than 1.5 gigawatts. Its other projects include the planned restart of NextEra Energy's Duane Arnold plant in Iowa, which would add more than 600 megawatts, and uprates at four Georgia Power reactor units. Google said its agreements are expected to cover nearly a quarter of the Energy Department's goal of adding 5 gigawatts through uprates and restarts by 2030.

How the shares reacted

Constellation shares were up about 9% at $292.35 in premarket trading at 8:31 a.m. ET, after closing Monday at $267.62, according to cnbc.com market data. At that price the move would add roughly $9 billion to a company worth about $95 billion at Monday's close, by TickerGrove's calculation. The stock had already gained 3.9% on Monday.