Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: First of all, thanks so much for being with us.
Speaker 2: We appreciate your times.
Speaker 1: Great to be on.
Speaker 2: Obviously, a big topic of discussion here right now is
Speaker 2: the war with Iran. Curious how it is affecting constellation.
Speaker 1: You know, not much directly right now. You know, as
Speaker 1: a domestic electricity producer, natural gas pricing in the US
Speaker 1: isn't really dramatically effected. We're already shipping every molecule we
Speaker 1: can of LNG, so there's not going to be an
Speaker 1: uptick of natural gas leaving the country until new facilities
Speaker 1: are built. So the price of natural gas has been
Speaker 1: relatively stable. We don't use oil to make electricity except
Speaker 1: during the debt of winter, and we're already past that
Speaker 1: period of time, so we're seeing some stability. In the
Speaker 1: long term, we're worried about what everybody else is worried about,
Speaker 1: supply chain issues, different things as we think about the
Speaker 1: implications to Asia, which will be of course more significant.
Speaker 2: So right now, the long term is more of a
Speaker 2: bigger problem for.
Speaker 1: Yeah, I think that's right. It's both a problem and
Speaker 1: an opportunity. I would say, how is an opportunity? Well, look,
Speaker 1: I think, you know, before when we were thinking about
Speaker 1: the data economy where all the data centers are going
Speaker 1: to go, there was a pretty good debate that a
Speaker 1: lot of the data centers were going to go to
Speaker 1: the Middle East. We had already seen agreements to transferring
Speaker 1: chips to the Middle East for the construction of data
Speaker 1: centers there. Unless we end up with, you know, really
Speaker 1: a solid piece in the Middle East, which seems you know,
Speaker 1: unlikely at least based on the history we've all lived together,
Speaker 1: I think people are going to start to have second
Speaker 1: thoughts about citing major new infrastructure projects in the Middle East.
Speaker 1: I don't think Europe is in the game for these
Speaker 1: data centers, so that means more data centers in the US.
Speaker 1: As the data economy builds out as an electricity producer,
Speaker 1: that means more customers that we're going to deal with.
Speaker 1: I think the same is true for industrial customers that
Speaker 1: already we're moving from Europe to the United States. These
Speaker 1: pressures on international energy prices are all going to drive
Speaker 1: people to North America.
Speaker 2: And you just touched on this, but also nuclear power
Speaker 2: extremely popular right now because of data centers and AI.
Speaker 2: So what are the different ways you can capitalize on that.
Speaker 1: Well, the first thing we got to do is lock
Speaker 1: down the existing fleet and make sure that we could
Speaker 1: operate it safely for as long as we can. That
Speaker 1: requires a good deal of investment. Having these agreements and
Speaker 1: having this social acceptance of nuclear and this kind of
Speaker 1: passion around nuclear means that we can make billions of
Speaker 1: dollars investment to keep the fleet the way it is
Speaker 1: operating for a much longer period of time. Also increasing
Speaker 1: the output of the fleet. We think we could get
Speaker 1: as much as six or seven brand new nuclear plants
Speaker 1: worth of energy just by uprating the existing fleet. We're
Speaker 1: busy underway doing those things at Constellation. And then the
Speaker 1: last piece of it is actual new nuclear, whether that
Speaker 1: be small modular reactors or large machines. So I mean,
Speaker 1: in all three areas, securing the existing fleet and the
Speaker 1: capital investments needed, increasing the output of those units, and
Speaker 1: building new units alongside of those. We're very active.
Speaker 2: When you power data centers, you also have consumer bills.
Speaker 2: So how do you balance that need for data centers
Speaker 2: and its effect on pricing while keeping reliable and affordable power.
Speaker 2: You know, we hear a lot of people say not
Speaker 2: in my backyard yeah.
Speaker 1: And look, I think this is involving conversation. I think
Speaker 1: the early days are data centers are takers, and they're
Speaker 1: driving up the cost of energy, and that is driven
Speaker 1: by this peak demand, which is a handful of hours,
Speaker 1: call it forty of the eight thousand hours we have
Speaker 1: in a year are constrained, and we're seeing higher prices
Speaker 1: in those hours as data center demand has come on.
Speaker 1: The President is addressing that through executive order and the
Speaker 1: data Economy customers have agreed to be flex at that
Speaker 1: peak or bring their own capacity resources at the peak.
Speaker 1: If we manage the peak, we want the data centers
Speaker 1: on the grid. Why is that because think about it,
Speaker 1: all the wires we've built all the way down your streets,
Speaker 1: all the big transmission lines you all see, are dramatically underutilized,
Speaker 1: with the exception of those forty hours. If we could
Speaker 1: get more electricity running through those wires during these periods
Speaker 1: where the system isn't being utilized, that means we could
Speaker 1: collect rent or tolls on those lines through these customers,
Speaker 1: and we could actually reduce costs. Coming into this SIRAUS
Speaker 1: session very different than last year. Our big think tank
Speaker 1: reports that are saying, hey, if you do this right,
Speaker 1: data centers actually drive down the cost of electricity, not out.
Speaker 2: But if you do them right, and data centers drive
Speaker 2: them down, what do you do in the meantime, Because
Speaker 2: it's not going to be immediate.
Speaker 1: In the meantime, you have to use other tools. So
Speaker 1: in the meantime, here's what we're thinking about. We've been
Speaker 1: working with some of our other industrial customers to voluntarily
Speaker 1: reduce demand during these peak hours so we're able to
Speaker 1: curtail certain customers have the data economy, customers pay them
Speaker 1: to do that so that we get that same flexibility
Speaker 1: on peak. The next up in terms of available generation
Speaker 1: are the backup generators at the data centers, how to
Speaker 1: use them more effectively as a grid resource, how to
Speaker 1: use batteries as a resource. And then as you look
Speaker 1: at three or four years out, that's when you're thinking
Speaker 1: about new gas fire generation.
Speaker 2: There's a lot of concern about a possible crash or
Speaker 2: at least some type of correction in the AI market
Speaker 2: and data centers. What's constellation read on this?
Speaker 1: You know what I think people think because there are
Speaker 1: major customers that we have some independent forecast. The reality
Speaker 1: is this, I am looking at what they are spending.
Speaker 1: They know their business, they know the demand. So as
Speaker 1: long as the capital expenditures on data centers is continuing
Speaker 1: to climb as it has, that is the best sign
Speaker 1: post for me to gauge the growth of my own business.
Speaker 1: We're not kind of separately going out there and evaluating
Speaker 1: AI and whether we have a bubble. What the data
Speaker 1: economy customers are telling us is that demand is increasing
Speaker 1: because they're building more and more.
Speaker 2: Speaking of growth, any specific M and A plans right now.
Speaker 1: Well, if there were, I wouldn't be able to tell you.
Speaker 2: All Right, we appreciate your time.
Speaker 1: Thanks for being with that, all right, Thank you