Dive Brief:
- Constellation Energy has issued a $900 million, 30-year green bond to finance “maintenance, expansion and life extensions” of its nuclear reactor fleet and other investments “that reduce or avoid carbon emissions or provide other environmental benefits,” the company said in a March 18 news release.
- Based on a comprehensive green financing framework released by Constellation last month and structured by Crédit Agricole CIB, this is the first green bond that could be used to finance nuclear energy in the United States, the company said.
- “With the nation’s first-ever corporate nuclear green bond issuance as part of our long-term financing mix, Constellation and the market have again confirmed: Nuclear investments are long-term sustainability investments,” Dan Eggers, executive vice president and CFO at Constellation, said in the release.
Dive Insight:
Constellation’s green bond issue comes as U.S. grid planners forecast a 4.7% rise in electricity demand over the next five years and highlights a growing consensus among utilities and power-hungry industrial users that nuclear power will play an important role in the energy transition.
“Constellation’s green bond issuance is an example of how to support investments in all clean energy, including nuclear energy,” Nuclear Innovation Alliance Executive Director Judi Greenwald told Utility Dive in an email.
Constellation says it is the top U.S. producer of carbon-free electricity, accounting for 10% of the country’s total clean generation. The company operates the United States’ largest nuclear reactor fleet alongside wind, solar, fossil gas, and hydropower generation assets.
Constellation’s green financing framework names several “eligible green categories” that could receive green bond proceeds.
Among Constellation’s clean energy fleet, the nuclear power category includes “increased capacity through uprates” of existing nuclear reactors and the development and deployment of advanced reactors “that produce energy from nuclear processes with minimal waste from the fuel cycle.”
The operational emissions reductions category covers fossil gas decarbonization initiatives to keep Constellation on pace with its 2030 emissions-reduction target and 2040 net-zero goal, including carbon capture systems that reduce power plant greenhouse gas emissions to below 270 grams of carbon dioxide per kilowatt hour or by 90% and plant retrofits that enable hydrogen blending.
Other investment categories eligible for green bond proceeds are clean hydrogen, including electrolyzer and transportation investments; energy storage, including batteries, pumped hydro and “flexible grid and energy capacity” investments; and “long-term and project-specific procurement expenditures supporting programs to bring off-site renewable energy
to customers,” such as Constellation Offsite Renewables solutions that combine renewable energy certificates with load-following energy supply contracts.
A Constellation representative referred questions about specific initiatives that could receive proceeds from the current bond issue to the company’s green financing framework.
In the March 18 news release, Romina Reversi, Americas head of sustainable investment banking at Crédit Agricole CIB, said Constellation’s bond “will undoubtedly serve as an inspiration for future global nuclear focused green bond issuances.”
Constellation could benefit from such issuances. Company spokesperson Paul Adams told Utility Dive in an email that “we do expect to utilize green instruments in the future” and that Constellation’s nuclear business would likely be the biggest beneficiary.
“It is safe to say that nuclear investments would continue to comprise a large share of the use-of-proceeds going forward given the level of investment we make in that foundational area of our business,” Adams said.
