Constellation Energy's Profit Nearly Doubles as Tech Giants Lock In Nuclear Power for AI

Constellation Energy, the country's largest nuclear power operator, said Monday that its profit nearly doubled in the third quarter, buoyed by a wave of long-term electricity contracts with technology companies seeking reliable power for artificial intelligence data centers. The Baltimore-based utility also disclosed new supply agreements with Google and Amazon and a conditional federal loan guarantee of up to $5 billion to help pay for upgrades at its reactor fleet.

In a securities filing disclosing the results, Constellation reported net income of $1.84 billion, or $5.19 a share, for the three months ended Sept. 30, compared with $930 million, or $2.97 a share, a year earlier. Adjusted operating earnings, the figure Wall Street watches most closely because it excludes one-time items, rose to $5.06 a share from $3.04, an increase of 66 percent. Revenue climbed to $9.55 billion from $6.57 billion, a jump the company attributed mainly to market conditions and the integration of Calpine, the natural-gas and geothermal generator it acquired earlier this year.

Constellation also raised the midpoint of its full-year adjusted earnings guidance to a range of $12.50 to $12.80 a share, the second increase this year. Coverage of the results noted it was a larger beat than the company's own prior forecasts had suggested, a sign that the surge in demand from data centers has further to run.

Powering the AI boom

The quarter's headline news was less the earnings beat than the volume of new contracts tying Constellation's reactors directly to the computing needs of two of the world's largest technology companies. Constellation said it signed a 20-year power purchase agreement with Google that will support more than $4.3 billion in upgrades across 11 nuclear units in Illinois, Pennsylvania and New Jersey, adding roughly 890 megawatts of new capacity beginning with the first uprate in 2028. A separate 15-year agreement will have Constellation supply Google with up to 2,700 megawatts of load-following power across the PJM Interconnection, the regional grid that serves roughly 65 million people across 13 states and the District of Columbia.

In a second deal, Amazon agreed to a 20-year, 690-megawatt power contract tied to the Calvert Cliffs nuclear plant in Maryland, along with a related retail supply arrangement. Constellation said the agreement would support more than $3 billion of investment, including a 190-megawatt expansion expected online between 2030 and 2032 and work to extend the plant's operating license.

The company also struck what it called its first "Peak+" agreement, a 20-year, 270-megawatt contract covering energy, capacity and emissions-free power credits from its existing reactors, starting in 2028. In all, Constellation said it signed about 4,560 megawatts of new long-term power-purchase agreements during the quarter, bringing its total for the year to roughly 8,500 megawatts.

• Google: 20-year deal funding $4.3 billion in uprates across 11 reactors; separate 2,700-megawatt load-following contract
• Amazon: 20-year, 690-megawatt deal at Calvert Cliffs backing $3 billion in investment and a 190-megawatt expansion
• "Peak+" agreement: 270 megawatts of energy, capacity and clean-power attributes beginning in 2028
• Rhode Island State Energy Center: $715 million purchase of a 609-megawatt gas plant from Shell, pending regulatory approval

To help finance the reactor upgrades, the Department of Energy's Office of Energy Dominance Financing issued a conditional commitment to guarantee up to $5 billion in loans from the Federal Financing Bank, with a 30-year term and rates fixed at 0.375 percentage points above comparable Treasury yields. The guarantee still requires execution of a final loan agreement, according to the company's disclosure.

Who pays, who benefits

Chief Executive Joe Dominguez framed the new contracts as proof that the company can meet surging demand without raising bills for the millions of households and businesses that already depend on its power.

"Our approach proves we can power the growing digital economy while strengthening our electric grid," Dominguez said in a statement accompanying the results, adding that the new megawatts "are coming online with no costs being borne by existing customers."

That assurance speaks to a tension playing out across the power industry. Data centers' electricity needs have grown so quickly that regulators in several states have opened inquiries into whether ordinary ratepayers are absorbing costs tied to new transmission and generation built largely to serve a handful of corporate customers. Constellation's arrangement with Google and Amazon follows a now-familiar pattern among nuclear operators — direct, long-term contracts that let a technology company effectively underwrite a reactor's future in exchange for guaranteed carbon-free electricity. Separately, Constellation agreed to buy the Rhode Island State Energy Center, a 609-megawatt natural-gas plant in North Kingstown, from Shell Energy North America for $715 million — a deal disclosed alongside the earnings filing that would add dispatchable gas capacity to its merchant fleet serving New England, pending regulatory sign-off.

For Google and Amazon, the contracts lock in electricity supply for data centers that run the artificial intelligence systems both companies are racing to scale, at a moment when access to power, not computing chips, has become one of the industry's tightest bottlenecks. For Constellation's existing nuclear workforce, the deals point toward years of additional uprate and relicensing work at plants that, in some cases, had been expected to wind down.

What comes next

Several pieces of Monday's announcement still require approval before they take effect. The Rhode Island acquisition needs clearance from state and federal regulators. The Energy Department's loan guarantee requires a signed loan agreement before any funds move. And the first new nuclear capacity from the Google-linked uprates is not expected until 2028, with the Amazon-linked expansion at Calvert Cliffs not due until 2030 at the earliest — meaning the financial benefit of Monday's contracts will show up gradually, over years, rather than in next quarter's results.

Constellation's nuclear fleet, meanwhile, kept running close to full tilt during the quarter: plants not counted toward a separate joint-ownership arrangement operated at a capacity factor of 97.2 percent, up from 96.8 percent a year earlier, leaving little spare output to absorb new demand without the uprates and new contracts the company announced Monday. Constellation is scheduled to report fourth-quarter and full-year results in February, when investors will get a fuller picture of how quickly the data-center-driven demand is translating into the company's bottom line — and of how regulators are responding to concerns about who ultimately pays for it.