Shares of Constellation Energy (CEG) advanced 3.6% to $270.81 during Monday's session, buoyed by the announcement of a significant new power supply agreement for a data center project in Texas.
Powering the AI Boom
The deal comes as the energy sector faces unprecedented demand growth, largely driven by power-intensive artificial intelligence operations. The U.S. Energy Information Administration forecasts national electricity consumption will hit record levels in 2026, with data centers being a primary contributor. Constellation recently completed its $16.4 billion acquisition of power producer Calpine, a move executives believe positions the company to capitalize on this rising demand.
Details of the Texas Agreement
Through its Calpine subsidiary, Constellation has signed a 380-megawatt contract with data center operator CyrusOne to supply a new facility adjacent to Calpine's Freestone Energy Center in Texas. The arrangement includes an exclusive option for a second phase of equal capacity. This "powered land" approach, which combines generation assets, land, and direct grid interconnection, pushes CyrusOne's total contracted power volume in Texas above 1,100 megawatts.
Constellation also disclosed a separate, 20-year energy services contract to manage heating and cooling systems for the Tennessee Titans' new stadium, scheduled to open in 2027.
Sector-Wide Movement
The positive sentiment extended across the power sector. Vistra shares climbed 2.5%, NRG Energy added 2.1%, and Talen Energy gained approximately 3.1%. This outperformed the broader market, where the SPDR S&P 500 ETF (SPY) edged up 0.6%.
Despite the optimistic headline, challenges remain. Project execution risks, including permitting delays and grid connection issues, alongside volatile Texas power prices, create uncertainty about the eventual profitability of such large-scale commitments. Investors will be watching for updates on the Calpine integration and further contract developments when Constellation reports its next quarterly results, expected around February 17.
