The company that has become the face of nuclear power for data centers has decided it also wants to own the largest gas fleet in the country. On January 10 Constellation Energy agreed to acquire Calpine in a cash and stock deal with an equity purchase price of about $16.4 billion, made up of 50 million Constellation shares and $4.5 billion in cash, plus the assumption of roughly $12.7 billion of Calpine net debt. After accounting for cash Calpine is expected to generate before closing and the value of its tax attributes, Constellation put the net purchase price at $26.6 billion, or 7.9 times 2026 enterprise value to EBITDA.
The logic is about load growth. Constellation said the combined company would have a significantly expanded presence in Texas, which it called the fastest growing market for power demand, and the deal brings together the two assets that large new customers most want: around-the-clock nuclear output and dispatchable gas.
What changes hands
Calpine describes itself as the largest U.S. generator of electricity from natural gas and geothermal resources. Its 79 operating facilities total more than 27,000 MW, and through wholesale and retail businesses it serves customers in 22 states and Canada. Its assets include the Geysers in Northern California, the largest geothermal generator in the country.
Constellation, before the deal, reported 55 GW of capacity from nuclear, gas, oil, geothermal, hydro, wind and solar facilities, and said it supplies about 10% of the nation's clean energy. Together, the two companies say they will have nearly 60 GW of capacity from what they call zero- and low-emission sources, including nuclear, natural gas, geothermal, hydro, wind, solar, cogeneration and battery storage. The combined footprint spans the continental United States, with key positions in Texas, California, Delaware, New York, Pennsylvania and Virginia. The retail business will serve 2.5 million homes and businesses.
Calpine's owners, led by Energy Capital Partners, will take Constellation stock and have agreed to an 18-month lock-up, subject to a schedule for potential sales. Constellation expects the deal to close within 12 months, subject to Hart-Scott-Rodino review and approvals from the Federal Energy Regulatory Commission, the Canadian Competition Bureau, the New York Public Service Commission and the Public Utility Commission of Texas.
The financial case
Constellation told investors the deal would add more than 20% to adjusted operating earnings per share in 2026 and at least $2 per share in later years, and more than $2 billion of free cash flow annually. It said its base earnings outlook should continue to grow at a double-digit rate through the decade, and that it expects S&P and Moody's to affirm its investment-grade ratings.
Those projections rest on a bet that wholesale power prices and the value of firm capacity will stay high as demand rises. That bet is the same one behind Constellation's nuclear deals. In September 2024 it signed a 20-year power purchase agreement with Microsoft to restart Three Mile Island Unit 1, renamed the Crane Clean Energy Center, to help Microsoft match its data center consumption in PJM with carbon-free energy. The Calpine deal lets Constellation offer customers both nuclear output and gas-backed supply from the same portfolio.
Why gas, and why now
The national demand picture explains the timing. In December, Lawrence Berkeley National Laboratory estimated that U.S. data centers consumed about 176 TWh in 2023, about 4.4% of national electricity, and projected that the share could reach between 6.7% and 12% by 2028. Nuclear can supply part of that, but the existing fleet is finite, restarts are rare, and new reactors are years away. Gas plants can run when the wind is calm and the sun is down, and existing combined cycle plants in competitive markets are among the few large sources of firm power available now.
Constellation's release acknowledges that role directly. It says Calpine's gas plants will play a key role in maintaining grid reliability for decades to come as customers move to cleaner sources, and notes that both companies have invested in carbon sequestration. At the same time, Constellation says it will keep investing in zero-emission energy through license extensions, uprates at existing reactors, possible advanced nuclear projects, renewables and the Crane restart.
The Texas angle
Texas is where the deal changes Constellation most. Calpine's gas fleet gives Constellation the significantly expanded Texas presence its release highlights. ERCOT has no capacity market, so generators earn their money from energy prices and ancillary services, and a large data center customer looking for firm supply has to contract for it directly. Owning a large gas fleet in ERCOT gives Constellation a product to sell to those customers alongside its nuclear output elsewhere.
That matters because Texas has become a magnet for AI campuses. Its fast permitting, available land and gas supply make it the default location for developers who cannot wait for interconnection in other regions. A supplier that can offer long-term, firm contracts backed by its own plants is in a strong position to sign them.
The questions regulators will ask
Combining the largest nuclear fleet with the largest gas fleet raises market power issues. FERC will look at concentration in the markets where both companies own generation, including PJM, where Constellation's nuclear fleet is concentrated and where the release lists Pennsylvania, Delaware and Virginia among the combined company's key states. Regulators can require asset sales as a condition of approval. The Texas commission will review the ERCOT side.
There is also a policy question. Constellation has argued that nuclear plants should be able to serve data centers directly, and critics have warned that such arrangements shift costs onto other customers. A Constellation that owns both nuclear and gas in the same markets will have more ways to structure supply for large loads, and regulators will want to know how that affects prices for everyone else.
What it signals
The deal sets a price on firm, flexible generation at the start of the data center boom. Constellation is paying 7.9 times Calpine's projected 2026 EBITDA, and it expects the investment to pay for itself quickly. If that expectation holds, other owners of existing gas plants will see their assets revalued, and the market for new firm supply, whether gas, nuclear or storage, will tighten further.
For data center developers, the message is that the power suppliers they depend on are consolidating, and that the largest of them intends to sell both carbon-free and gas-backed power.