Existing power plants will play a central role in supplying electricity to data centers despite industry pledges that new facilities would bring their own generation, according to Constellation president and CEO Joseph Dominguez. Speaking during an earnings conference call Thursday, Dominguez said the early phase of the data economy will depend heavily on current generation assets. "We're never going to build this economy if … we have to wait for new power plants to be built before we can connect any data center," he said.
Constellation owns roughly 55 GW of generation capacity, including approximately 22 GW of nuclear power, and reported second-quarter adjusted operating earnings of $2.55 per share, up from $1.91 per share a year earlier. The Baltimore-based independent power producer sold its 606-MW gas-fired Brazos Valley plant in Texas to LS Power for $860 million, or about $1,420 per kilowatt, after a competitive bidding process. The company's nuclear fleet has potential uprates totaling around 1.1 GW, according to the announcement. In Texas, large load interconnection requests—mostly from data centers—have reached about 474 GW.
According to Dominguez, the grid faces a peak capacity issue rather than an energy shortage, with substantial available capacity in transmission and generation systems that can serve customers more than 99% of all hours annually. "The secret sauce here is to deal with the handful of peak hours that present reliability concerns, and at the same time to harvest the stranded capacity that exists every other hour of the year," he said. The company believes peak periods can be managed through batteries, demand response, and peaking resources, while Constellation's fleet offers "a fixed-price, clean energy resource that they could count on for decades" during all other hours.
The company explained that Texas Gov. Greg Abbott's request for additional information from planned data centers—including details about power supplies, expected electricity and water consumption, and public financial assistance—can be provided quickly and won't cause meaningful delays to the state's Batch Zero interconnection process. Chief of external affairs and growth officer Dave Dardis characterized the requirement as "a temporary measure that we think is manageable by the industry." Constellation expects currently depressed wholesale power prices in ERCOT to recover as data centers come online, with battery storage and other resources driving down electricity costs by launching before anticipated load. The market will tighten as facilities are built and reach "more or less equilibrium," Dominguez said.
The power plant sale will satisfy Constellation's settlement obligations from its Calpine purchase, according to CFO Shane Smith, who noted that buyers in the competitive process recognized "the long-term value of gas-fired assets with the potential for even higher utilization rates." Assets the company must divest under its Department of Justice agreement are expected to generate roughly $5.9 billion in gross proceeds. For data center customers, the challenge extends beyond managing peak demand to securing power for every other hour of the year—a gap Constellation's existing clean energy fleet is positioned to fill.