Constellation Energy Acquires Calpine for $16.4 Billion
Constellation Energy, the largest nuclear power plant operator in the United States, has announced plans to acquire Calpine, a major natural gas and geothermal energy producer, for $16.4 billion. This deal underscores the growing demand for electricity, driven in part by the rapid expansion of artificial intelligence (AI) technologies and the infrastructure required to support them.

The acquisition, revealed on Friday, is a cash-and-stock transaction and ranks among the most significant deals in the power sector. It highlights the pivotal role natural gas continues to play in meeting energy needs, despite global efforts to transition to cleaner energy sources. This reliance on natural gas poses challenges for climate initiatives unless effective carbon capture and storage technologies are implemented.
The merger aims to enhance Constellation Energy’s portfolio as the tech giants Microsoft, Google, and Amazon ramp up their energy procurement for data centers powering AI and other services. Increasing electricity demand, fueled by electric vehicle adoption, new factory developments, and heat pump installations, has disrupted the traditionally steady energy sector.
"Lots of people who were not paying any attention to electricity a year ago are now trying to figure out how to participate in meeting what seems to be inevitable growth in demand," said Daniel Yergin, vice chairman of S&P Global.
Based in Houston, Calpine operates a wide range of natural gas power plants across several states, in addition to managing the Geysers Geothermal Energy Complex in California. Constellation, headquartered in Baltimore, stated that acquiring Calpine’s assets would bolster grid reliability and expand its presence in high-growth areas like Texas while adding renewable energy sources to its portfolio.
“We believe that natural gas and geothermal, along with nuclear, will be critically important for the nation,” said Joseph Dominguez, CEO of Constellation Energy, during a call with investors. He emphasized the importance of balancing sustainability with reliability: “We believe that natural gas and clean energy, blended together, will be very attractive to customers.”
Following the announcement, Constellation Energy’s stock soared 25% in early trading, marking a substantial rise for an acquiring company. The company has already experienced significant stock growth over the past year, driven by increasing expectations for U.S. power demand.
Nuclear energy, recognized for its zero-emission capability, has emerged as a key beneficiary of AI-driven investments. Last year, Constellation allocated $1.6 billion to restart a nuclear reactor at Three Mile Island in Pennsylvania, a project funded by Microsoft. However, the limited availability of restartable nuclear plants and the slow development of smaller reactors have made natural gas a more immediate solution despite its environmental drawbacks.
“It’s going to be hard for the utilities to provide the power that these data centers need without gas,” said Andrew Gillick, an energy strategist at Enverus.
A report from Goldman Sachs estimates that power demand from data centers will grow by an average of 15% annually through the end of the decade.
Andrew Novotny, CEO of Calpine, expressed optimism about the merger, stating that the combined company would drive investment in technologies like zero-emission nuclear energy and battery storage. However, reliance on natural gas introduces price volatility risks, according to Enverus analysts.
The deal, subject to regulatory approval, is expected to close within a year. Addressing potential antitrust concerns, Constellation Energy indicated its willingness to divest assets if required to secure approval.