Constellation Energy (NASDAQ:CEG) and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) have inked a major long-term power purchase agreement (PPA) that will supply Google with 3.59 gigawatts of electricity. At least 890 megawatts of this supply will come from Constellation's nuclear fleet, with the remainder sourced through the PJM wholesale market. The nuclear portion of the deal spans 20 years, while the additional 2.7 gigawatts is covered under a 15-year PPA. Financial terms of the agreement were not disclosed, but Constellation plans to invest over $4 billion to expand and modernize its nuclear fleet.
The deal marks a significant win for Constellation, whose stock surged 12% following the announcement. The agreement supports Google's ambitious plans to expand its network of artificial intelligence (AI) data centers, which require substantial power. Constellation will also implement Google Cloud and Alphabet's Gemini Enterprise AI solution as part of a five-year technology alliance to enhance its operations.
Nuclear power has seen a resurgence in the U.S., driven by the high energy demands of AI technologies. Constellation's commitment to modernizing its nuclear fleet underscores the growing importance of nuclear energy in meeting these demands. However, the deal's success hinges on smooth collaboration between the two companies, as the nuclear industry is prone to execution risks such as regulatory hurdles and cost overruns.