Big Tech Invests Billions in Nuclear Uprates to Power PJM Grid
Alphabet Inc. (NASDAQ:GOOGL) has signed a 20-year deal with Constellation Energy Corp. (NASDAQ:CEG) to add 890 megawatts of new nuclear capacity to the PJM Interconnection grid. This follows Amazon.com Inc. (NASDAQ:AMZN)'s similar 20-year agreement six days earlier, which added 190 megawatts. Together, these contracts fund 1,080 megawatts of new power, addressing about 16% of the grid's identified shortfall. Constellation's shares surged 8.4% to $289.98 in premarket trading, and nuclear stocks rallied with it.
The deals involve so-called uprates, a process that increases the output of existing reactors by upgrading turbines, steam generators, and digital controls. Amazon's agreement covers 690 megawatts from the Calvert Cliffs Clean Energy Center in Maryland, including a 190-megawatt uprate due between 2030 and 2032, with over $3 billion in investment. Google's deal is larger, funding uprates at 11 reactors in Illinois, Pennsylvania, and New Jersey, with the first expected by 2028 and more than $4.3 billion in new investment.
Despite the positive developments, Constellation's shares are still down 17.9% this year. The company's stock jumped 22.3% in September 2024 after Microsoft Corp. (NASDAQ:MSFT) signed a 20-year deal to restart a reactor at Three Mile Island. However, the politics around electricity pricing have shifted, placing pressure on large users like tech companies to fund new power supply. PJM's “Bring Your Own Power” approach aligns with these new deals.
The contracts confirm that tech companies will continue investing in nuclear power, but questions remain about how quickly this power can reach the grid. Google's first uprate is set for 2028, while Amazon's could arrive as late as 2032. Meanwhile, nuclear peers also saw higher trading in premarket activity. Constellation carries an Overweight consensus rating from analysts, with an average price target of $349, suggesting about 20% upside from the premarket price.