Constellation Energy Corp. (CEG) Announces a 20-year nuclear PPA for ~700 MW in PJM; positive for industry broadly

Following the FERC order on 9/29 on PJM's RBP process, Constellation Energy (CEG, Neutral) announced a 20-year PPA with Amazon (AMZN) to support and expand Calvert Cliffs Clean Energy Center, Maryland's only nuclear power plant. The agreement includes 690 MW of nuclear power, of which 190 MW will be uprates expected to come online between 2030 and 2032. Based on CEG's disclosures of a 1 GW nuclear PPA implying $125-$325 mn of FCFbG upside, the agreement implies ~$86mn-$224mn uplift on FCFbG on the total 690 MW. While we view the announcement as a solid update for both CEG and the broader industry, reflective of potential for contracting in PJM amidst the current uncertainty, the size of the contracted capacity in the PPA is relatively small for the company and only makes up ~3% of its total nuclear fleet. We remain Neutral rated on CEG, and see potential for shares of CEG and IPPs to react positively on the news. The agreement enables $3 bn+ in infrastructure investment to fund state-o