Constellation Energy to Buy Power Producer Calpine
Constellation Energy’s deal to buy Calpine is being driven by fast-rising demand for electricity in part by the technology industry’s investments in artificial intelligence.
Constellation Energy’s deal to buy Calpine is being driven by fast-rising demand for electricity in part by the technology industry’s investments in artificial intelligence.
Constellation Energy, the nation’s largest nuclear power plant operator, has agreed to buy another electricity producer, Calpine, for $16.4 billion, a deal that shows how fast-rising demand for power, partly a result of the data centers being built for artificial intelligence, is having far-reaching effects on the economy.
The cash-and-stock deal, announced Friday, ranks among the power sector’s biggest, and indicates that natural gas is likely to play a larger role than many expected a few years ago in meeting the nation’s electricity needs. That could undermine efforts to address climate change unless companies quickly figure out how to capture and store emissions from gas power plants.
The tie-up would broaden Constellation’s portfolio as companies like Microsoft, Google and Amazon are scrambling to secure energy for data centers used to run artificial intelligence and other services. Electricity demand is also increasing because of the building of new factories in the United States and greater use of electric vehicles and heat pumps. The growth is reshaping a traditionally sleepy industry that has not been accustomed to turbocharged growth.
“Lots of people who were not paying any attention to electricity a year ago are now trying to figure out how to participate in meeting what seems to be inevitable growth in demand,” said Daniel Yergin, the vice chairman of S&P Global, who won a Pulitzer Prize for his book “The Prize: The Epic Quest For Oil, Money and Power.”
Calpine, which is based in Houston and privately held, operates a large fleet of natural gas power plants in several states as well as the Geysers geothermal energy complex in California.
Constellation, which is based in Baltimore, said in a statement that it expected Calpine’s natural gas assets to help ensure the reliability of the electric grid. The combination also would broaden the company’s presence in Texas, where power demand is growing quickly, and add more renewable energy to its portfolio.
