Upratings as the fastest route to new power capacity
Google and Constellation announced a landmark agreement to bring 890 MW of new nuclear capacity to the PJM grid as part of a long-term power deal. This new energy capacity will not be the result of building new nuclear reactors, rather it will be achieved through renovations and component replacements that will simply increase the generation capacity of older existing plants, something known in the industry as an "uprating."
What makes it possible and cost-effective for Constellation to invest what will be billions of dollars, is a the 20-year power purchase agreement signed by Google to buy not just that new capacity but as much as 3,600 MW of new power from the existing plants. The fact that there is an enormous buyer—in this case, Google—guaranteeing future payments for its power production, enables Constellation to make the huge investments in new equipment and technology at 11 Constellation-owned nuclear units in Illinois, Pennsylvania, and New Jersey. As part of the agreement, Constellation will be retaining an estimated 4,400 existing jobs and creating approximately 7,200 new construction jobs during the building period, all of which amount to more than $4.3 billion of new investment by Constellation.
This is not the first (or last) uprating agreement. Back in 2024, Constellation unveiled an eye-popping agreement to restart its previously shuttered Three Mile Island Unit 1 reactor in Pennsylvania with a 20-year power purchase agreement with Microsoft buying the reclaimed power generation from the renamed Crane Clean Energy Center, for its data centers at a price that was widely believed to be well above the market price for energy. Similarly, Google contracted with NextEra Energy to restart the Duane Arnold Energy Center nuclear power plant in Iowa. Perhaps setting the example, was Holtec International, which took over the abruptly shuttered Palisades Nuclear Power Plant in Michigan in 2022, but rather than proceed to decommission it, they opted to restart the plant, which will likely happen this year.
Earlier this year, Meta announced a similar agreement with Vistra, to uprate its existing reactor fleet by over 400 MW of power through component upgrades at Beaver Valley in Pennsylvania and Davis-Besse and Perry in Ohio. On October 5th, the DOE announced that the Energy Dominance Financing Office has conditionally approved the provision of a loan commitment for over $4 billion to help make those upgrades at Vistra's nuclear power plants lower cost for all rate payers across Pennsylvania and Ohio and to support the delivery of more reliable and clean energy generation to meet the growing power demand being seen across the PJM region.
Just a few weeks ago, on September 30, Constellation and Amazon similarly announced that they had signed a 20-year power purchase agrement that involved uprating at the 1,790 MW Calvert Cliffs Clean Energy Center. The deal involves upratings of about 190 MW at a cost of nearly $3 billion and a guarantee of 690 MW of power for Amazon's data centers. Again, it was the revenue certainty that enables Constellation to commit to a relicensing path and making billions in improvements to an older operating power plant and related infrastructure.
A benefit of these types of uprating agreements is not only that upgrades improve the performance of existing plants, it also guarantees the continuity of the plant, which means that the plant owners will not consider retiring the plants but will pursue relicensing of the plant, even though doing so is also an expensive and complicated process that requires expensive and extensive application to the NRC. Yet, in the case of Vista, Meta guaranteeing to buy the power achieved through the uprating process also protects and preserves nearly 4 Gigawatts (GW) of the already existing baseload power that currently powers more than 3 million homes. These plants are also supporting thousands of good-paying jobs and the project could potentially add as many as 3,000 project-related jobs during the planned outage and uprating work.
If what you need is more power than you have now, the low-hanging fruit in the nuclear space is to relicense an operating plant, rather than allow it to retire (or retiring it prematurely, as Gov. Cuomo did to New York's Indian Point and as Gov. Newsom almost did to Diablo Canyon—but fortunately reversed himself). Next easiest, is to conduct an uprating at an existing and operating plant through a series of planned upgrades that enable that plant to produce more power than it used to.
After saving, relicensing and upratings at existing built plants, the next way to increase power generation requires building new reactors as quickly and cost-effectively as possible. Constellation is also clearly anticipating needing to do so and recently made an investment into Blue Energy, apparently because it believes in the accelerated development pathway being offered by Blue Energy, with its "Gas-to-Nuclear" approach to adding new nuclear generation through a phased-in development process.
