The US government announced a ‘historic’ nuclear energy deal

The General Services Administration (GSA), which manages government buildings, just announced a major nuclear energy contract. The announcement comes on the heels of several big tech companies making a flurry of nuclear energy deals last year.

The 10-year, $840 million contract is for 10 million megawatt-hours of electricity, which the GSA says is the equivalent of what’s needed for more than 1 million homes annually. The agency awarded the contract to Constellation, which operates the nation’s largest nuclear fleet, and recently announced an agreement with Microsoft to restart a nuclear reactor at Three Mile Island. Nuclear energy makes up a significant portion of the GSA deal, about 4 million megawatt-hours, according to Constellation spokesperson Paul Adams.

Silicon Valley is increasingly turning to nuclear energy to satiate rising electricity demand from AI data centers. The federal government is the nation’s single largest energy consumer, making this contract a big boon to the nuclear industry.

“Frustratingly … nuclear energy was excluded from many corporate and government sustainable energy procurements. Not anymore. This agreement is another powerful example of how things have changed,” Joe Dominguez, Constellation president and CEO, said in a press release. “The United States government joins Microsoft and other entities to support continued investment in reliable nuclear energy that will allow Constellation to relicense and extend the lives of these critical assets.”

Constellation says it generates 10 percent of the nation’s carbon pollution-free energy. A majority of its output is nuclear energy, but it also produces hydro, wind, and solar power. It also generates electricity from gas-fired power plants, although the company has set a goal of reaching 100 percent carbon-free electricity by 2040 compared to close to 90 percent today.

Constellation and the GSA declined to answer questions about how much of the electricity included in the contract will come from each source aside from nuclear power plants. Altogether, it’s the biggest energy procurement contract the GSA has signed in its history.

“This historic procurement locks in a cost-competitive, reliable supply of nuclear energy,” GSA administrator Robin Carnahan said in a press release. “We’re demonstrating how the federal government can join major corporate clean energy buyers in spurring new nuclear energy capacity and ensuring a reliable, affordable supply of clean energy for everyone.”

The contract will allow Constellation to extend licenses for existing nuclear power plants as well as “invest in new equipment and technology” that should result in 135 megawatts of additional capacity. The GSA agreed to purchase 2.4 million megawatt-hours of electricity from that added capacity over 10 years. Outside of GSA buildings, the deal also extends to 13 other agencies, including the departments of Veterans Affairs and Transportation as well as the Federal Bureau of Prisons, the National Park Service, the Social Security Administration, and the US Mint.

The GSA is framing the contract as a way to lock in more affordable prices as data centers drive up electricity demand and increase competition for limited clean energy sources:

In the face of uncertainty over future electricity prices and increasing electricity demand from data centers and AI facilities, for instance, this contract provides federal agencies with budgetary stability and protections from future price increases by keeping their electricity costs fixed for 10 years, while also continuing to bolster the domestic nuclear industry.

Google, Meta, Amazon, and Microsoft have all inked splashy nuclear energy deals over the past year. In September of last year, Microsoft and Constellation announced a plan to restart a shuttered reactor at Three Mile Island in Pennsylvania, the site of the worst nuclear energy accident in US history.

The Biden administration has also made nuclear energy a key part of its plan to transition the US away from fossil fuels to energy sources that don’t cause climate change. Last October, the Department of Energy announced a $1.52 billion loan to help restart a retired nuclear generating station in Covert Township, Michigan. And while President-elect Donald Trump plans to undo progress made toward clean energy, the Trump campaign agenda included efforts to “support nuclear energy production.”