Another big deal! Nuclear power giant Constellation has reached a 20-year power purchase agreement with Meta

According to the Zhitong Finance APP, Constellation Energy Corp. (CEG.US), the largest nuclear power operator in the United States, announced on Tuesday that it has reached an agreement with Meta (META.US) to sell electricity generated from its nuclear power plant in Illinois. With the surge in electricity demand driven by the development of artificial intelligence (AI), this deal could promote the new reactor construction plans for the nuclear power plant.

According to the statement, Meta, which owns Facebook, Instagram, and WhatsApp, has signed a 20-year power purchase agreement to start procuring electricity from the Clinton nuclear power plant beginning in mid-2027, when the state's subsidy policy will expire. Constellation did not disclose the financial details of the transaction.

This agreement reaffirms the enormous electricity demand from tech companies for data centers and AI computing. Nuclear energy is favored for its ability to provide power around the clock and its zero greenhouse gas emissions advantage.

Under the agreement, Constellation will invest in enhancing the power generation capacity of the Clinton plant. The company is also considering the construction of new reactors at the site, which has already received federal approval for the construction of a second unit.

Constellation CEO Joe Dominguez stated in an interview, "This is a reasonable location to discuss the construction of next-generation nuclear facilities with companies like Meta. Substantial progress has been made in the relevant consultations."

After the announcement, Constellation's stock price surged 16% in pre-market trading on Tuesday, while Meta's stock price remained relatively stable.

In fact, this is not the first time tech companies have ventured into the nuclear energy sector. Last year, Constellation received a $1.6 billion investment from Microsoft (MSFT.US) to restart the Three Mile Island nuclear power plant in Pennsylvania. Despite a strong interest in building new reactors, electricity suppliers remain cautious about significant nuclear investments—Southern Company (SO.US) faced years of delays and costs exceeding budget by more than double for its Vogtle project completed in Georgia last year.

Dominguez stated that the support from large tech companies will drive Constellation to initiate the construction of new reactors, which will become an important breakthrough for the nuclear power industry. He is currently evaluating various technological options, ranging from small modular reactors still in development to the AP1000 large reactors used by Southern Company.

For the Clinton nuclear power plant, which has an installed capacity of about 1,100 megawatts (enough to power approximately 1 million households), the deal with Meta marks a significant turning point. In 2017, when nuclear operators across the United States struggled to compete with cheap natural gas and renewable energy, the then-owner Exelon (EXC.US) threatened to shut down the plant. However, after Illinois passed a ten-year subsidy policy, the plant was able to continue operations.

Other nuclear power plant subsidies for Constellation in Illinois will also expire in the coming years. Dominguez revealed that he is in discussions with several clients about long-term power purchase agreements similar to that with Meta, and new agreements are expected to be reached within the next 6 to 12 months Urvi Parekh, Meta's global energy chief, stated that this is the company's largest power purchase agreement to date. With the growing interest in nuclear power, Meta announced in December last year that it was soliciting proposals for up to 4 gigawatts of new nuclear power, and has received about 50 proposals, including from Constellation.

The new nuclear power projects are expected to be connected to the grid and generate electricity in the early 2030s, while the Clinton agreement is seen as a key measure to ensure near-term electricity supply. As state subsidies are set to expire, Meta and Constellation indicated that they hope to ensure the competitiveness of the power station.

Parekh said in an interview, "It’s unclear who will buy power from this nuclear plant. We want to ensure that this site continues to be a place for nuclear operations, which will allow Constellation to start thinking creatively about how they can expand capacity here in the future."