China Halts October Fuel Exports as Global Diesel Crunch Deepens
The leading economics blog online covering financial issues, geopolitics and trading.
Goldman analyst Carly Davenport views Amazon's nuclear power deal with Constellation Energy as "positive for industry broadly" as the "Powering Up America" theme and nuclear theme continue as Big Tech scrambles for the cleanest form of stable power to fuel data centers chip stacks.
Davenport said Constellation Energy's 20-year deal to supply Amazon with 690 megawatts from Maryland's Calvert Cliffs nuclear plant is positive for both the utility and the broader power complex.
Calvert Cliffs has two nuclear reactors, with a combined generating capacity of about 1,790 megawatts, enough to power 1.3 million homes. The deal unlocks power to Amazon's data centers across the 13-state grid overseen by PJM Interconnection.
The deal also supports more than $3 billion in infrastructure investment at the nuclear power station, including upgrades adding 190 megawatts of generating capacity between 2030 and 2032. It also provides Constellation with revenue certainty.
Terms of the agreement: CEG and Amazon signed a 20-year PPA for nuclear power at the Calvert Cliffs Clean Energy Center, Maryland’s largest carbon-free energy facility and only nuclear plant.
Amount of capacity: The PPA is for 690 MW of total capacity, which includes a 190 MW of uprates scheduled to come online between 2030 and 2032.
Capital commitment: The agreement enables $3 bn+ in infrastructure investment to fund state-of-the-art upgrades across the entire 1,790 MW facility.
PJM implications: All electricity from Calvert Cliffs will continue to flow into the PJM regional grid. The parties have entered a separate but related retail supply agreement to support Amazon’s operations across the 13-state PJM market.
Beyond the agreement: The company highlighted the contract provides the long-term revenue certainty necessary for Constellation to pursue a 20-year license extension for the facility and explore further development of new clean energy power plans on-site.
Financial implications: While the release provides no color around pricing, we would point to the company’s disclosures which include a sensitivity on FCFbG upside from data center PPAs. CEG noted that 1 GW Nuclear PPA at a $20-$50/MWh premium to the PTC floor would translate to $125M-$325M FCFbG upside, implying FCFbG uplift of ~$86mn-$224mn if applied to the total 690 MW contract with Amazon.
Davenport added, "We view the PPA announcement as a solid update for the company and industry especially given it is for capacity in PJM, which has been a challenging environment recently due to regulatory uncertainty within the market, and investor confidence has been low in incremental data center PPAs being announced in the near term."
"This agreement demonstrates how private investment can strengthen critical energy infrastructure," said Constellation CEO Joseph Dominguez.
Because of the AI data center buildout, nuclear power is getting new life, and grid upgrades will help buffer the fragile PJM region during peak demand.
More importantly, the added capacity may help Maryland after years of 'climate-friendly' policies transformed the grid into a mess that collided with the era of data centers and electrification. One has to ask what the Democrat-run state was thinking over the years as it focused on everything but preparing the state for the next evolution of the modern economy.
Constellation shares were up nearly 4% in pre-market trading. Davenport maintains a "Neutral" rating on the utility, with a 12-month price target of $305.
The leading economics blog online covering financial issues, geopolitics and trading.
Iran’s Disappearing Oil Is Becoming Everyone’s Problem
World's Tallest Dam Project Gets New Life With Fresh World Bank Funding
Venezuela’s Oil Comeback Could Cost More Than $100 Billion
The materials provided on this Web site are for informational and educational purposes only and are not intended to provide tax, legal, or investment advice.
Nothing contained on the Web site shall be considered a recommendation, solicitation, or offer to buy or sell a security to any person in any jurisdiction.
Merchant of Record: A Media Solutions trading as Oilprice.com