Earlier this month, Constellation Energy announced that it had signed a 10-year, $840 million contract with the General Serviced
Administration (GSA), a first-of-a-kind, multi-agency purchase to power the federal government with 10 million MWh worth of nuclear energy. The deal, known as a power purchase agreement (PPA) will help to support license extensions and capacity uprates at Constellation’s nuclear energy plants.
This landmark contract follows on an agreement made in September, when Constellation signed a 20-year PPA with Microsoft to restart Three Mile Island Unit 1 as the Crane Clean Energy Center (CECC). Under the agreement, Microsoft will purchase energy from the CECC as part of its goal to help match the power used by its data centers. In the weeks following
that agreement, Kairos Power announced a PPA with Google to provide the tech giant with 500 megawatts of nuclear energy by 2035.
In June 2023, ECA hosted a webinar that explored how PPAs by federal agencies such as the Department of Energy (DOE), the Department of Defense (DOD) and the GSA can support the development of advanced nuclear reactors and SMRS. In part, this is because the federal
government is the largest purchaser of power in the United States. Likewise, private companies like Microsoft and Google, to provide increasingly valuable and energy-intensive data centers with a reliable, base-load source of power, have positioned themselves as large power purchasers as well.
Furthermore, when the federal government or a private company provides a contractual commitment to purchase power from a plant,
certain business risks associated with the project are reduced, thereby improving the financial profile of the project for private investors. This means that PPAs can serve as a meaningful method to spur the siting and development of novel power projects that utilize innovative technologies. For federal agencies, the key to successful PPAs is ensuring they have the legal authority, the process, and the political will to engage in them.
The Congressional Research Service (CRS) has stated, “Federal agency agreements to purchase power from advanced reactors could substantially improve the financial feasibility of such projects, both at the demonstration and commercialization stages. Such power purchase agreements (PPAs) would provide a projected revenue stream that could help advanced reactor projects obtain financing and potentially reduce their financing costs. Federal agencies could also offer above-market
prices for the power to encourage commercialization of nuclear technologies, if authorized by Congress.”
The agreements nuclear power producers like Constellation and Kairos Power have reached with the power purchasers, such as the Federal government, Microsoft, and Google are ground-breaking for the nuclear energy industry. Such PPA’s could serve as the model that empowers new nuclear energy projects to move forward in the
future.
ECA anticipates discussing the impacts of these PPAs from April 22 - 24 at the Fourth Annual ECA Forum: Moving New Nuclear Projects Forward; hosted by ECA in collaboration with U.S. Department of Energy Office
of Nuclear Energy and the Idaho National Laboratory. The ECA Forum is the only meeting designed to bring together DOE, federal, state, local and tribal governments and policymakers with developers, utilities, regulators, industry, and academia to identify opportunities, challenges and to build the partnerships necessary to support nuclear development. To learn more about the Forum and register for the premiere event, visit our website.
