Constellation Energy (Nasdaq: CEG) received a conditional U.S. government loan commitment of up to $5 billion (C$7.02 billion) to boost output at existing nuclear plants.
The proposed financing would support upgrades at eight plants in Illinois, Maryland and Pennsylvania, potentially adding about 1.1 gigawatts of generating capacity, the U.S. Department of Energy said Tuesday.
The upgrades offer a route to more nuclear generation from existing plants, with potential implications for uranium demand. However, the announcements don’t quantify additional fuel purchases or say when the company would contract for them.
Twenty-year agreements with Alphabet’s (Nasdaq: GOOGL, GOOG) Google and Amazon (Nasdaq: AMZN) support more than $7 billion of investment to add about 1,080 megawatts, Constellation said. A separate agreement with Meta Platforms (Nasdaq: META) supports another 30 megawatts at the Clinton plant in Illinois.
The commitment builds on capacity expansions already announced under those customer agreements.
Due diligence
Cheaper financing could help accelerate the work, Constellation said. The commitment remains subject to due diligence, definitive financing documents and other conditions. It doesn’t represent a final company decision to proceed with any individual upgrade or at every plant under consideration.
The plants covered are Braidwood, Byron, Clinton, Dresden, LaSalle and Quad Cities in Illinois; Calvert Cliffs in Maryland; and Limerick in Pennsylvania. The commitment includes an option to finance future upgrades at other Constellation sites, the department said.
The upgrades, known as uprates, increase output at operating reactors. Raising a reactor’s licensed power level requires an operating licence amendment from the U.S. Nuclear Regulatory Commission.
Higher reactor output typically requires fuel with a higher uranium enrichment or more fresh fuel, the regulator says. Equipment such as turbines, pumps and generators may need to be modified or replaced to accommodate the increase.
The financing supports a federal goal of facilitating 5 gigawatts of upgrades at existing reactors. Constellation must meet technical, legal, environmental and financial conditions before the department finalizes and funds the loan.
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