Constellation is now one of three owners of the plant, joining Texas municipal utilities Austin Energy (16%) and CPS Energy (40%). The South Texas Project Nuclear Operating Company (STPNOC) will continue to operate the plant.

The $1.75 deal faced strong opposition from Austin Energy and CPS Energy, which serves San Antonio. CPS Energy has filed litigation claiming right of first refusal to the plant, which Austin Energy has intervened in.

The muni utilities also told the U.S. Nuclear Regulatory Commission (NRC) in July STPNOC did not have approval to submit an application to NRC related to the sale.

But the parties closed the transaction Nov. 1.

“The ongoing legal proceeding did not prohibit NRG and [Constellation] from consummating the transaction, and Constellation is working with all parties to reach a resolution to the matter,” Constellation Energy said in a Nov. 1 SEC filing.

The South Texas Plant includes two pressurized water reactors which came online in 1988 and 1989, respectively.

The agreement means ComEd will be able to power its facilities with 100 percent clean energy produced at the same time and place it is consumed, in a ‘first’ for an investor-owned U.S. utility.

The ComEd agreement follows a similar hourly-matching agreement between Constellation and Microsoft to power one of the latter’s Virginia data centers with nearly 100 percent nuclear energy. In 2022, Constellation and Microsoft developed a analytics-based software solution to help companies match their energy use every hour of the day with locally produced carbon-free electricity, with Microsoft becoming the first customer to use the technology.

Many organizations aiming for net-zero emissions currently purchase annual renewable energy certificates (RECs), representing clean energy generated by solar or wind facilities within the U.S. over a year. However, this approach often means energy comes from distant locations and times, even though operations are nearby.

In 2021, the White House issued an Executive Order recognizing the significance of hourly carbon-free energy matching in achieving clean energy goals. The order directed federal agencies to collaborate to ensure that 50% of all federal buildings use hourly matching with clean energy by 2030.

“Matching clean energy production to the time and place a customer uses it is the only way we will truly achieve zero carbon emissions across our economy,” said Joe Dominguez, President and CEO of Constellation.

Chicago-headquartered ComEd’s hourly purchase of carbon-free energy will match its expected electricity consumption of approximately 65,000 megawatt-hours. This consumption includes the company’s corporate and regional headquarters, reporting centers, business offices, training facilities, special-use facilities and substations.

One of Microsoft’s data centers in Boydton, Virginia will be powered by up to 35 percent nuclear energy, under a new agreement with Constellation.

The nuclear power will complement Microsoft’s new wind and solar purchases and bring the data center to operating at close to 100 percent carbon-free electricity around the clock.

Microsoft will track its environmental performance using Constellation’s hourly carbon-free energy matching platform. Constellation’s Microsoft Azure-based hourly matching software is a relatively new offering for customers looking to match their power demands with regional carbon-free energy around the clock.

Prior to the evolution of hourly matching, much of the clean energy that American companies procured to reduce their use of generation from fossil fuels was produced elsewhere, at a different time of day, month or even year. This approach offered no guarantee that clean, carbon-free power was being used.

The companies said Constellation and Microsoft had been working collaboratively for several years to pioneer the hourly emissions accounting technology.

“Our collaboration with Constellation makes real-time matching of regional clean power generation and demand available to all companies that want to advance the energy transition,” said Adrian Anderson, general manager of renewable and carbon free energy at Microsoft.

Over the course of this fleetwide project, Constellation said repowering efforts will enable 315 MW of its existing wind fleet to generate greater output at the same wind conditions. Constellation operates 27 wind projects that can produce about 1,400 MW of electricity.

Construction at Criterion Wind is underway with the installation of new, high-efficiency rotors, turbine blades and generators at the 28-unit site. The older turbine blades and equipment will be recycled. The power generated at the wind project will continue to be sold to Old Dominion Electric Cooperative (ODEC). The project is expected to be completed before year end.

Located in Oakland, Maryland, the 70 MW Criterion wind farm began operating in 2010.

The transaction will be financed with a combination of cash and debt and is valued at $1.75 billion, with an effective purchase price of $1.4 billion after taking into consideration the present value of tax benefits to Constellation.

After the transaction, Constellation will be one of three plant owners, joining municipal utilities Austin Energy and CPS Energy (serving San Antonio). The South Texas Project Nuclear Operating Company (STPNOC) will continue to operate the plant. The transaction is expected to be finalized by the end of 2023.

“With the potential to run for at least 46 more years with the right policy support, we look forward to working with the South Texas Project’s other owners to continue bringing clean, reliable electricity to this growing region for decades to come,” said Joe Dominguez, president and CEO of Constellation.

Constellation already operates the largest fleet of nuclear plants in the United States. The company has ownership interests in 13 generating stations, with 23 nuclear units capable of producing approximately 21,000 MW of electricity, enough energy to power approximately 15 million homes.

Constellation said the 38 percent mark nearly doubled the previous blending record for similar generators. The blending test at Hillabee occurred May 18 on a Siemens Energy SGT6-6000G gas turbine.

Constellation said only “minor modifications” were required for the blending test. The company said it added an inlet for the hydrogen to be blended, a control valve and calibrated instrument to measure fuel flow.

The company said nitrogen oxide (NOx) emissions did not increase during this blending test.

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The Environmental Protection Agency (EPA) recently released new rules aimed at reducing carbon emissions from the electric sector, citing hydrogen co-firing as a primary technology to help decarbonize the U.S. power sector and achieve the nation’s climate goals.

Constellation said it will use the results from this test to inform its plans for transitioning its natural gas facilities to carbon-free technology in the coming years. The company has a large nuclear fleet and produces nearly 90 percent of its energy from carbon-free sources, with a goal of achieving 100 percent carbon-free electricity generation by 2040.

Hillabee Generating Station is a three-unit plant that began operating in 2010. The plant is fitted with Selective Catalytic Reduction technology, which significantly reduces nitrogen oxide emissions.

The utility said that the Inflation Reduction Act of 2022 caused it to examine nuclear uprate opportunities that were cancelled a decade ago due to market forces. It said the 45Y tax credit for the production of new carbon-free electricity “helps make these investments economic.”

The Braidwood and Byron projects are expected to replace the main turbines at the two facilities with high efficiency units. Constellation said increased output could be available as early as 2026, with the full uprated output available by 2029. Work is expected to occur in stages during scheduled refueling outages.

Earlier in February, Constellation said it planned to allocate around $1.5 billion over the next three years for upgrade investment including nuclear uprates, wind repowering and hydrogen. 

Constellation is the largest owner and operator of nuke plants in the U.S. In October the utility said it plan to ask the Nuclear Regulatory Commission (NRC) to extend the operating licenses of its Clinton and Dresden nuclear plants in Illinois by an additional 20 years.

Allied Power will continue to provide maintenance at 12 Constellation nuclear plants through mid-August 2028, per an extension signed by the companies. The new agreement includes staff augmentation and has an option for a five-year renewal.

The 12 plants are located in Illinois, Maryland, New York and Pennsylvania.

Allied Power provides a range of services, from routine maintenance to outage services and management, capital construction and specialized support – for power plants throughout the U.S.

Constellation is the largest owner and operator of nuke plants in the U.S. In October 2022 we reported the Exelon spinoff plans to ask the Nuclear Regulatory Commission (NRC) to extend the operating licenses of its Clinton and Dresden nuclear plants in Illinois by an additional 20 years.

If approved by the NRC, Clinton could operate until 2047 and Dresden could operate until 2049 (Unit 2) and 2051 (Unit 3).

The Baltimore-based utility holding company cited both state and federal support for carbon-free generation resources as it outlined a scenario that would keep its nuclear power plants in service until 2070.

In a press release announcing the quarterly results, Joe Dominguez, president and CEO, said that support for carbon-free energy in the federal Inflation Reduction Act that was passed into law in August “creates opportunities for us to extend the life of our nuclear fleet past mid-century.”

The law is also expected to better enable the company to pursue hydrogen production to emissions from difficult-to-decarbonize sectors of the economy. 

“Now there are both state and federal policies that recognize the essential role our zero-carbon nuclear assets must play in achieving our nation’s climate goals,” the statement said.

Higher expenses

The upbeat outlook was tempered by a net loss of $188 million during the quarter, which ended September 30. That compared to net income of $607 million for the same quarter a year earlier. The company reported fuel and power purchase costs of nearly $4.7 billion during the quarter, up from nearly $1.55 billion a year earlier.

Total operating expenses for the quarter topped $6 billion, up from nearly $3.5 billion in the third quarter of 2021. 

Constellation has more than 32,400 MW of generating capacity. During the quarter its nuclear fleet, including output from the Salem Generating Station, produced 43,794 GWh in the quarter, compared with 44,350 GWh a year earlier. Excluding Salem, its nuclear plants achieved a 96.4% capacity factor, compared with 97.7%1 for the third quarter of 2021.

Also during the quarter Constellation announced its intent to seek renewal of the operating licenses for its Clinton and Dresden nuclear power plants. If granted by the Nuclear Regulatory Commission, the renewals would allow the plants to operate for another 20 years: Clinton could operate until 2047 and Dresden could operate until 2049 (Unit 2) and 2051 (Unit 3).

‘Material improvement’

Constellation said its credit rating improved during the third quarter as S&P rating services raised its issuer credit rating to ‘BBB’ from ‘BBB-’, reflecting what the utility said was S&P’s view of a “material improvement” in its business risk profile. In particular, S&P cited the passage of the Inflation Reduction Act as a “material credit positive” for the utility.

In S&P’s view, the earnings statement said, the nuclear production tax credits (PTC) provide “long-term visibility into the cash flows for our nuclear fleet” and benefit potential future hydrogen production.

Constellation noted the PTC recognizes the contributions of carbon-free nuclear power by providing a federal tax credit of up to $15/MWh, subject to phase-out, beginning in 2024 and continuing through 2032. 

The hydrogen PTC provides a 10-year federal tax credit of up to $3/kilogram for clean hydrogen produced after 2022 from facilities that begin construction prior to 2033. Both tax measures include adjustments for inflation. Constellation said the hydrogen PTC creates additional opportunities for its nuclear fleet to enable decarbonization of other industries through the production of clean hydrogen.

In late 2021, the Department of Energy approved construction and installation of an electrolyzer system at Constellation’s Nine Mile Point nuclear station in New York. The system is designed to separate hydrogen and oxygen molecules in water to produce carbon-free hydrogen. 

Additional state funding is intended to help demonstrate hydrogen fuel cell technology at the nuclear plant to provide long-duration energy storage for the electric grid. That project is currently being designed and is expected to be operational in 2025. The projects could set the stage for possible deployment at other nuclear power plants. 

And the company said it is working with public and private entities to pursue development of regional hydrogen production and distribution hubs, including participation in the Midwest Alliance for Clean Hydrogen, or “MachH2” hydrogen hub.