Nuclear tax credits underpin growth, says Constellation

27 February 2024

Federal nuclear production tax credits are providing the foundation for the USA's largest producer of carbon-free energy to continue to invest in growth opportunities, Constellation Energy said in its 2023 results announcement and 2024 earnings forecast.

Constellation recently marked its second anniversary as a standalone company since the separation of Exelon Generation's regulated utility and competitive energy businesses (Image: Constellation)

"The most valuable commodity in the world today remains clean energy that can be depended on in every hour of every day, and no US company is better positioned to deliver on that promise than Constellation, which has more clean, reliable nuclear capacity than all other US competitive generators combined," Constellation President and CEO Joe Dominguez said. "State and federal policies, bipartisan political support, public opinion surveys and increased customer demand for reliable and clean energy all point to strong and growing support for nuclear energy to power our economy for decades to come … we see a growing landscape of opportunities to continue building our business and lead the clean energy transition."
The wide-ranging Inflation Reduction Act (IRA), signed into law by President Joe Biden in August 2022, includes support for existing and new nuclear capacity. Constellation said nuclear production tax credit (PTC) in the act is providing a stable foundation that will allow it to continue investing in growth opportunities, including by adding clean energy generation to its fleet through measures including uprates, licence extensions and asset acquisitions while also returning capital to shareholders. "The PTC provides revenue visibility and also preserves Constellation’s ability to capture upside from tightening power market conditions," the company said.

Earlier this month, Constellation filed an application with the Nuclear Regulatory Commission for a 20-year licence renewal for the Clinton plant in Illinois, which would allow the single-unit boiling water reactor to continue providing energy to the region until 2047.

The company said it was targeting long-term base earnings per share growth of at least 10% through the decade "backstopped" in part by the nuclear production tax credit. Monetising the value of the "reliable, carbon-free nuclear power" generated at Constellation's Clean Energy Centers through hourly carbon-free matching solutions, behind-the-meter opportunities such as data centres or hydrogen, government clean energy procurements or higher market prices offer further opportunities for it to grow its base earnings, it added.

The company's nuclear fleet in 2023 "continued to achieve unmatched reliability, allowing us to deliver carbon-free energy to our customers in all hours of the day under some of the harshest weather conditions in decades," Dominguez said. "We took a disciplined approach to growing our business in 2023, completing our acquisition of a partial stake in the South Texas Project nuclear plant, repowering our wind assets, taking steps to extend the life of our nuclear plants and investing in new equipment to increase their output. We are delivering our hourly-matched carbon-free energy product to top sustainability leaders, and our results reflect growing acknowledgement by our customers that nuclear energy delivers unique value that can’t be matched anywhere in the marketplace."

Constellation's nuclear assets generated a total of 174,047 GWh in 2023, up from 173,350 GWh in 2022.

Researched and written by World Nuclear News