How Utilities Are Locking In PPA Deals with Tech for Nuclear & Clean Power to Power AI Surge

The wave of long-term agreements between major tech firms and utilities reflects a structural shift in how large consumers secure power: these are not one-off PPAs but multipronged, infrastructure-heavy commitments that guarantee demand as much as they anchor capital for utilities. A recent example: Meta’s 20-year PPA with Constellation Energy to purchase the full 1,121 MW output of the Clinton Clean Energy Center starting mid-2027, representing not only clean energy supply but preserving plant operations and jobs while replacing state subsidies.

Brookfield Renewable’s framework deal with Microsoft—10.5 GW of new global renewable power capacity between 2026 and 2030—likewise shows that tech firms are pushing utilities to scale build-out of renewables, storage, and flexible clean resources. These partnerships offer utilities predictable revenue streams but impose large upfront capital, permitting, and operational risk.

Regionally, Virginia emerges as a bellwether. Dominion Energy reports over 47 GW of data center demand under contract or negotiation in Virginia alone, along with a $50 billion capital investment plan through 2029, primarily to expand transmission, distribution, and generation. Similarly, Entergy has commenced construction of multiple combined-cycle natural gas plants (1.5‐GW initially, rising to ~2.26 GW) plus massive transmission infrastructure to support Meta’s planned 2-GW Hyperion data center in Richland Parish, Louisiana.

Strategy-wise, big tech is using these contracts not just to meet sustainability goals, but to ensure energy reliability and cost predictability in the face of skyrocketing demand. Utilities are responding with large CAPEX, leaning into nuclear (existing and advanced), renewables, gas generation, and transmission grid modernization. Yet risks abound: regulatory delays, community pushback (especially re: gas plants), cost burdens shifted to ratepayers, and execution risk (permitting, licensing for nuclear, fuel supply, etc.).

From an investment banking perspective, utilities securing stable, long-term PPAs with creditworthy customers offer attractive growth and income, particularly via regulated rate bases, clean energy tax incentives, and “firm” capacity like nuclear. However, valuation must reflect elevated capex intensity, regulatory risk, and potential future carbon/regulation cost shifts—utilities without these agreements may face stranded-asset risk or being bypassed by tech firms integrating onsite or off-grid generation.

Open questions for further observation include: how pricing under these PPAs gets allocated between ratepayers vs tech customers; how quickly regulatory and permitting frameworks adapt to accelerate buildout; which utilities succeed in scaling nuclear (SMRs and uprates) in a cost-effective manner; how grid interconnection and transmission constraints will be resolved; and how market boundaries between regulated utilities and merchant generators evolve in this demand-heavy environment.