Constellation signs first Peak+ deal for 270 MW

Constellation Energy signed its first Peak+ customer, a 20-year bilateral agreement covering 270 MW that pairs output from its existing nuclear fleet with batteries, demand response and new generation. The company did not name the buyer, which is purchasing "unit-contingent energy, capacity and attributes from our existing nuclear fleet," Constellation said.

Peak+ prices $20/MWh to $50/MWh above the floor set by the federal nuclear production tax credit, according to a slide in Constellation's third-quarter investor presentation cited by Utility Dive, which first reported the offering. That band is below the $110/MWh to $130/MWh levelized cost of new combined-cycle gas turbines in PJM's eastern region by 2032, assuming a $3,000/kW build cost. The production tax credit pays nuclear units up to $15/MWh when revenues fall between $26/MWh and $44.75/MWh, Constellation says.

For allocators, the disclosure supplies a price band and a contract template for existing nuclear, much of it in PJM. At 270 MW, the deal is about 1% of Constellation's roughly 22 GW nuclear fleet, so the question is how much of that capacity can be sold this way. Under a unit-contingent contract, the buyer absorbs the risk that a unit is offline.

Joe Dominguez, Constellation's chairman, president and chief executive, said the offering responds to risks that weigh on developers of new plants: construction delays, cost overruns, interconnection delays and long-term fuel-price uncertainty. He also cited the "political tilt in this last election," which he said raises the prospect of stronger federal carbon regulation affecting fossil-fueled plants. "Peak+ is going to be broadly defined as bringing capacity solutions plus existing clean and reliable generation," Dominguez said on the quarterly earnings call. "We could add batteries and generation supply at our plants given the vast amount of land that we own around the plants."

Constellation is not relying on Peak+ alone for contracted revenue. This month PSEG and Constellation outlined a 200-MW uprate at Salem that would support a nuclear power purchase agreement with Google, as Private Wealth Daily previously reported.