How Is Constellation Energy Accelerating Growth Through PPAs?

Constellation Energy Corporation CEG benefits from its focus on Power Purchase Agreements (PPAs) to support its objective of providing carbon-free energy. The company can do this, particularly through contracts that secure the long-term operation of its nuclear facilities and facilitate new renewable energy projects via its Constellation Offsite Renewables (CORe) program.

PPAs offer a steady, long-term source of income because they provide payments for power generated over a predetermined length of time. CEG believes that the CORe product offers an efficient approach for securing offsite renewable energy contracts, enabling businesses to contribute to the development of new wind, solar, or other renewable energy initiatives that supply power to the grid and correspond with their consumption through an uncomplicated retail renewable energy agreement.

Constellation Energy continues to expand its portfolio of PPAs with leading corporations, including 20-year nuclear deals with Meta for the Clinton Clean Energy Center in Illinois and with Microsoft to restart the Three Mile Island Unit 1, now renamed as the Crane Clean Energy Center.

CEG inked a more than $1 billion contract in January 2025 to supply nuclear electricity and energy-saving technologies for federal buildings. In addition to the previously planned Crane restart, Constellation and its partners intend to add over 1,100 MW of sustainable energy around the clock by 2028.

By developing new projects and facilities that align with corporate sustainability objectives, these partnerships also support Constellation Energy in achieving its goal of supplying carbon-free energy and contributing to the transition to a low-carbon economy.

Utilities Are Expanding Operations Through PPAs

PPAs mainly help utilities by giving them a steady, long-term source of income from renewable energy projects. PPAs provide long-term financial stability, which reduces market price volatility and promotes the expansion of renewable energy sources. Vistra VST is advancing its Deer Creek Solar & Storage project (50 MW solar/50 MW storage) and developing over 600 MW of solar PPAs with Microsoft (405 MW in Illinois) and Amazon (200 MW in Texas). Dominion Energy D and its subsidiaries rely heavily on long-term PPAs, which ensure earnings stability while enabling the integration of clean energy into its generation mix.

CEG Stock’s Earnings Estimates

The Zacks Consensus Estimate for 2025 and 2026 earnings per share indicates an increase of 8.54% and 25.99%, respectively, year over year.

CEG Stock Trading at a Premium

CEG is trading at a premium relative to the industry, with a forward 12-month price-to-earnings of 27.89X compared with the industry average of 20.51X.

CEG Stock’s Price Performance

In the past six months, CEG’s shares have risen 33.1% compared with the industry’s 27.7% growth.

CEG’s Zacks Rank

CEG currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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