Nuclear Power Purchase Agreements Take Shape in the U.S.

For some time now, power purchase agreements (PPAs) for the output from U.S. wind and solar facilities have become increasingly frequent, as companies and organizations seek to offset their carbon emissions with emissions-free renewable energy. Constellation Energy Corporation (NYSE:CEG ) (Baltimore, Maryland) may have begun shaking up U.S. PPA activity with the signing of agreements for offtake from the company's nuclear power plants, which provide an alternative to wind and solar energy for emissions-free generation.

Constellation's most recent deal for its nuclear power came late last week, when the company signed an agreement with Chicago, Illinois-based utility Commonwealth Edison (ComEd) to provide enough nuclear power to operate all of ComEd's facilities.

Unlike the typical PPA seen recently where a company will purchase all or a set amount of power from a wind or solar facility, ComEd's energy use will be monitored on an hourly basis and nuclear-generated power purchased from Constellation accordingly.

Constellation is emphasizing the dynamic nature of the agreement, which it says allows ComEd to "be the first investor-owned utility in the nation to power its facilities with 100 percent clean energy produced at the same time and place it is consumed."

ComEd's real-time energy purchases will correspond to Constellation's regional nuclear power plants. Industrial Info is tracking six operational nuclear power plants belonging to Constellation in Illinois. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Plant Database can click here for the plant profiles. Many of the facilities are situated in northern Illinois, serving Chicago, where ComEd is headquartered, and extending into ComEd's service territory, which includes much of the northern area of the state.

Constellation's ability to monitor ComEd's hourly energy needs comes from software developed in conjunction with Microsoft Corporation (NASDAQ:MSFT ) (Redmond, Washington) that is being used in a similar agreement to purchase power for a Virginia data center.

Earlier this summer, Constellation and Microsoft signed an agreement to provide nuclear power for the balance of power needed to achieve nearly carbon-free operations from Microsoft's data center in Boydton, Virginia. Microsoft has PPAs in place to cover some of the facility's generation with wind and solar power, but Constellation's nuclear power will provide the balance of emissions-free generation, providing up to 35% of the facility's power needs.

Similar agreements made with power providers in the future could go a long way toward making the difference between a nuclear facility remaining open or retiring in the face of increasingly competitive pressure from renewable energy and natural gas. As a sign of how eager the Biden administration is to maintain the country's operational nuclear fleet to continue to provide carbon-free generation, it has established the $6 billion Civil Nuclear Credit (CNC) program to help keep the fleet operational. The first recipient of the funding was the Diablo Canyon nuclear facility near Avila Beach, California, units 1 and 2 of which were scheduled to be decommissioned in 2024 and 2025, respectively. But the award of up to $1.1 billion from the CNC program could pave the way toward keeping the plant open. Subscribers can click here for the plant profile.

PPAs could not only help nuclear plants keep their doors open, but even revive plants that have already been closed. Last week, Wolverine Power Cooperative (Cadillac, Michigan) announced that had signed an agreement with Holtec International's (Jupiter, Florida) Palisades Energy LLC to reopen the 800-megawatt Palisades nuclear power plant in Van Buran County, Michigan.

The Palisades plant was closed in 2022 by then-owner Entergy Corporation (NYSE:ETR ) (New Orleans, Louisiana), which sold the facility to Holtec for decommissioning. Wolverine has agreed to purchase up to two-thirds of the power generated from the reopened plant, with cooperative Hoosier Energy Rural Electric Cooperative Incorporated (Bloomington, Indiana) taking the balance. According to news media, Holtec is still working to obtain a loan from the U.S. Department of Energy to repower the plant. Subscribers can click here for the plant profile.

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