Google expands nuclear power in US to supply artificial intelligence - critical summary review

A data center is a warehouse of computers, and the ones being built for artificial intelligence consume electricity on a scale once reserved for heavy industry. The companies that build them do not generate power. They sign long-term contracts with the companies that do, usually through a power purchase agreement: the buyer commits to paying for a block of electricity for years, and that guaranteed revenue is what lets the generator spend money up front.

There are two ways to get more electricity out of a nuclear fleet under such a contract. One is to build a reactor, which can take a decade or more. The other is an uprate: swapping turbines, steam generators and digital control systems at reactors that are already running and already plugged into the grid, so the same buildings produce more megawatts. The agreement Google announced on Tuesday is the second kind.

What Google actually bought

Google signed a 20-year power purchase agreement with Constellation Energy, the largest nuclear plant operator in the United States, covering 890 megawatts tied to upgrades at 11 reactors across six sites in Illinois, Pennsylvania and New Jersey. The contract underwrites more than $4.3 billion of new investment by Constellation. Electricity from the first upgraded plant is expected in 2028, with the full 890 megawatts arriving over roughly five years. Constellation says the work supports about 4,400 existing jobs and creates around 7,200 construction jobs.

According to Google and Constellation, 890 megawatts is roughly what one large new reactor, or three small modular reactors, would generate. No such reactor is being built. The capacity comes from equipment already standing.

A second, larger contract came with it: a 15-year supply agreement for 2,700 megawatts that is not tied to any specific generation source and serves, in Google's words, as long-term revenue certainty for Constellation's operating plants. Constellation's fleet is not only nuclear. According to its latest sustainability report, nuclear accounted for 70% of its generating capacity last year, renewables 8%, and gas and oil the remaining 22%. Together the two contracts cover 3,590 megawatts. Constellation also picked Google Cloud and Gemini Enterprise under a five-year technology alliance the companies describe as "AI for energy", aimed at siting, modelling power flows, permitting, equipment monitoring and outage management.

Why existing reactors, and why now

Google's own numbers show the pressure. Its electricity demand jumped 37% last year and its carbon emissions rose 18%, according to its latest sustainability report. Nuclear is attractive because it runs continuously and emits no carbon while generating, but new reactors take years that the data center buildout does not have.

That is why recent deals cluster on plants that already exist. "Existing generation and uprates are the cheapest, cleanest and most reliable ways to add supply to the market," analysts Sunaina Ocalan and Raphael Lee of Bernstein wrote in a report published the day of the announcement.

The queue behind Constellation

This is the third such deal in a short run. Amazon agreed last week to buy 690 megawatts from Constellation, including added capacity from the expansion of the Calvert Cliffs plant in Maryland. In June, Walmart signed a contract for nuclear power, part of it from upgrades at an Illinois plant. Microsoft signed a deal in 2024 for power from the Three Mile Island plant in Pennsylvania, which Constellation plans to restart next year.

Google has been collecting these arrangements too: last year it contracted power from NextEra Energy to support the restart of the Duane Arnold reactor in Iowa, shut since 2020, and last month it secured extra capacity by funding upgrades at two Southern Co nuclear plants.

The limit is now visible. With this sequence of contracts, Constellation has few additional facilities left that could support similar deals, company spokesman Paul Adams said.

Who pays for the grid

All 11 reactors sit inside PJM Interconnection, the largest electricity grid in the country, covering 13 states and Washington, D.C., and serving about 67 million people. It also contains Loudoun County, Virginia, the biggest data center hub in the United States.

PJM has struggled to keep up. An independent market monitor filed a complaint last year with the Federal Energy Regulatory Commission arguing that PJM was planning to let huge data centers connect to a grid it could not reliably serve, which could lead to blackouts. In January, the Trump administration and the governors of every state PJM operates in issued a joint statement calling for an "emergency" power auction to support new plants through long-term contracts. PJM postponed that auction last week after the federal regulator directed it to revise the proposal with stronger protections against data centers raising electricity bills for other customers. Rates have climbed steeply in PJM states: in New Jersey, prices are up 54% over five years.

PJM management has also proposed requiring data center customers to bring their own power or be cut off remotely during peak demand. Google and Constellation said their deal is a response to that proposal.

The policy argument runs in parallel. New York Governor Kathy Hochul said she wants to end tax breaks for large data centers and require them to pay a premium for electricity and contribute more toward the grid, which she argued could offset costs for other ratepayers; the state is running a temporary moratorium on certain new hyperscale projects while regulators write environmental standards. The White House says the current rules already do that work: assistant press secretary Liz Huston said data centers are becoming "engines of growth and opportunity for communities across the country that want them", and that by requiring them to pay for their own power, water and utilities, "the President has ensured the American people never foot the bill for private companies' profits."

How the market read it

Constellation shares rose as much as 15% in New York, their biggest intraday gain since April, while Alphabet, Google's parent, slipped by as much as 0.5%. The announcement landed on a day when the S&P 500 and the Nasdaq both closed at records, lifted by AI-linked names.

What to do with this information

Three things are checkable from here, and they are what will show whether this deal is what it was announced to be.

The first is delivery. The 890 megawatts are promised to the PJM grid starting in 2028, arriving in stages over about five years. Uprates are engineering projects at plants that must keep running, and the date is the test of the claim that existing reactors can add supply faster than construction can.

The second is bills. Electricity prices in PJM states have already risen sharply, with New Jersey up 54% in five years, and the federal regulator has told PJM to rewrite its auction rules specifically to protect other customers from data center demand. Watch whether PJM's "bring your own power" requirement is adopted, whether New York's moratorium becomes permanent standards, and whether the two positions described above translate into actual rules.

The third is supply of deals. Constellation has said it has few remaining plants able to support contracts like this one. If that holds, the next announcements cannot be more uprates of the same kind, and the question becomes what replaces them: restarts, new reactors, small modular reactors, gas, or data centers being told to wait.

When you read the next headline about a tech company "adding" gigawatts of clean power, what will you check first: whether anything new is being built, or who is already connected to the same wires?