Two of the country’s largest power generators are joining forces.
Constellation Energy has agreed to buy Houston-based Calpine for $16.4 billion in a cash and stock transaction. The move was announced last week amid a surging demand for electricity. The deal is composed of 50 million shares of Constellation stock and $4.5 billion in cash plus the assumption of approximately $12.7 billion of Calpine net debt. With the cash expected to be generated by Calpine between signing and the expected closing date, Constellation has valued the deal for the privately held company at $26.6 billion.
Constellation is already the nation’s largest producer of 24/7 emissions-free electricity. By adding Calpine, the largest U.S. producer of energy from low-emission natural gas generation, Constellation said they will become the nation’s largest clean energy provider and serve more customers coast-to-coast with various energy and sustainability products.
President of Consumer Energy Alliance David Holt said this acquisition by Constellation is a prime example of how to meet growing energy demand while creating affordable, reliable and cleaner energy.
"The deal brings together Constellation’s zero-carbon nuclear fleet and Calpine’s low-carbon natural gas generation fleet, both of which are the biggest in the country," Holt said. "The combined company will also have wind, solar, carbon capture and geothermal assets, too, which what an all-of-the-above energy strategy looks like in the real world.
Holt called it a significant move for Constellation in adding more energy resources to their portfolio and for the state of Texas in trying to cure the population growth which brings a massive energy demand.
"A diversity of energy sources like this with a nationwide footprint means affordable, reliable and cleaner energy for American families and small businesses.” said Holt.
It's also believed this that agreement will help meet the expected doubling of electricity demand in Texas because of AI, data centers and electrification of Permian natural gas operations.
"There's a lot of estimates that we're going to need twice as much, if not more, electricity just in the next three, four to five years than we have right now," Holt said.
AI data centers are generating tons of energy and adding to the already large energy demand. For example, if a Google search uses one unit of power, a search that uses artificial intelligence would use 10 units of power. Holt predicts that in the next 10 years, every Google search will be using AI. It'll be up to the state to find the new energy needed.