Constellation Energy Corp. (NASDAQ: CEG), announced its largest ever power purchase agreement with Microsoft Corp., this morning.
The Baltimore-based energy company plans to reactivate the long-dormant Three Mile Island Nuclear Plant to meet the growing energy demand driven by artificial intelligence. This is especially true for Microsoft’s Data Centers.
In a Friday press release, Constellation confirmed Microsoft’s commitment to purchase 100% of the electricity generated by the plant over the next 20 years.
Constellation Energy creates thousands of jobs
The restart of Unit 1 will create 3400 jobs and increase state and federal tax revenues by over $3 billion.
The move will also add “835 Megawatts of carbon-free electricity to the grid”.
Constellation Energy anticipates that the plant will be back online by 2028, if it receives approval from Nuclear Regulatory Commission.
Note that Unit 1 has been shut down in 2019 for economic reasons and is not the reactor that partially melted in 1979, resulting in the worst nuclear disaster in American history.
Joe Dominguez, the chief executive officer of Constellation Energy, said today:
This plant was one of the safest, most reliable nuclear power plants on the grid. We look forward to bringing this plant back with a brand new name and a mission to serve as a powerful economic engine for Pennsylvania.
Constellation Energy stock benefits from the AI boom
Artificial intelligence is already a major factor in increasing energy demand.
Recent estimates indicate that AI data centers could require an additional 14 GW of power capacity by 2030.
You can’t turn it off. You can’t turn it off.
Constellation Energy’s financials will be strengthened by the Microsoft deal.
This is especially significant, considering CEG earned an adjusted $1.68 per share in its last reported quarter compared to analysts’ $1.72.
CEO Dominguez praised the company’s carbon free nuclear fleet, but he did not call it industry-leading.
Constellation Energy’s stock is currently rated “overweight” by Wall Street, despite the fact that it has nearly doubled in value year-to date.
Analysts’ average price target for CEG is $222, which is roughly the same as what it’s currently trading at.
The shares of the energy company remain attractive to income investors, as they pay a current dividend yield of 0.68%.
This post Constellation Energy stock soars after landmark power purchase agreement with Microsoft could be modified as new information unfolds
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