Alphabet Inc. Class C (GOOGL.US) splashes US$4.3 billion on power, locking in 3,590 megawatts of long-term energy from Constellation Energy (CEG.US)

Alphabet Inc. Class C (GOOGL.US) has signed a deal with Constellation Energy (CEG.US), the largest U.S. grid operator, to procure 3,590 megawatts of power, with new nuclear generation accounting for roughly a quarter of that supply. The two companies said the agreement will bring Constellation more than US$4.3 billion in new investment and involves expanding capacity at multiple nuclear reactors owned by the power company in the Midwest and Mid-Atlantic regions. Major technology companies are racing to lock in massive power supplies across the United States to feed data centers, striking unprecedented agreements with American Electric Power Company, Inc. Over the past two years, Constellation announced a deal to restart the Three Mile Island nuclear reactor in Pennsylvania to serve Microsoft Corporation data centers, while Alphabet Inc. Class C signed on to restart a NextEra Energy nuclear plant in Iowa. Under the latest package, Alphabet Inc. Class C signed a 20-year power purchase agreement to procure 890 megawatts from multiple Constellation-owned nuclear plants, which will be upgraded to produce more power from existing reactors. The two companies said power from the first upgraded plant is expected to be delivered in 2028. Alphabet Inc. Class C also signed a long-term supply agreement to procure an additional 2,700 megawatts from Constellation in the PJM region. Alphabet Inc. Class C said this portion of power is not tied to a specific generation source and is intended to provide long-term revenue certainty for Constellation's operating plants. Maryland-based Constellation is the largest nuclear plant operator in the United States and also owns a large fleet of gas-fired power plants. Amanda Peterson Corio, Alphabet Inc. Class C's global head of energy and power, said in a statement, "We are committed to meeting our own growth responsibly, actively investing in clean, reliable power and bringing new capacity to our nation's grid." As part of the agreement with Alphabet Inc. Class C, the 11 nuclear units expected to be upgraded are located in Illinois, Pennsylvania and New Jersey, within the footprint of PJM Interconnection, the largest U.S. grid. PJM management has proposed requiring data center customers connected to the grid across 13 states to either bring their own power or face the risk of being remotely disconnected from the grid during peak demand periods. The two companies said the agreement between Alphabet Inc. Class C and Constellation is a direct response to PJM's "bring your own power" proposal.