CONSTELLATION ENERGY CORPORATION stock forum
CEG 's planned acquisition of assets from Calpine signals a forward-thinking strategy to expand its footprint and strengthen its capabilities. While the move appears promising in terms of long-term growth, the immediate drop in the stock price reflects investor caution. Concerns about whether CEG may have overpaid for the deal are likely weighing on market sentiment.This hesitation is understandable, particularly given concerns highlighted in a recent Utility Dive article. The energy industry has faced challenges in the past with overbuilding supply by anticipating demand that ultimately fell short of expectations. In rapidly evolving sectors like data centers, advancements in chip efficiency and technology could reduce energy requirements, leaving overbuilt infrastructure underutilized.
BOA analysts noted the high demand growth projections “bring longer term risks.”
“The experience of the decade to the mid-1980’s is a rough guide to these risks,” according to the research note.
The U.S. built more than 200 GW of coal-fired capacity in the two decades leading up to 1987, according to Montana-based Headwaters Economics.
“Eventual overbuild of supply resources that are highly capital intensive into less than projected demand” can raise capital costs, drive bill increases and threaten investment recovery, BOA said. “While these outcomes are unlikely in 2025, we do see lessons of what risks to watch for in the longer term.”
Electricity demand from data centers and artificial intelligence could be a boon to the electric sector, Jim Robb, president of the North American Electric Reliability Corp., said in a June discussion hosted by the United States Energy Association. But Robb also said he doubts all of the load growth being forecast today will materialize, as both AI-enabling chips and algorithms become more efficient.
“We saw this with the internet,” Robb said, “In the 90s and early 2000s we had similar concerns around electricity demand that largely didn’t actually occur because the chips got better, the algorithms got better. We will see something similar happen with the AI chips ... We’re going to see load growth, but it’s probably not as dramatic as we think right now.”
Despite these risks, CEG's acquisition positions it to capture future opportunities in a transforming energy landscape. While short-term skepticism prevails, the potential for long-term value creation remains compelling for strategic investors.
CEG dropping because of the FERC rejection of the Talen/Amazon deal makes no sense.The Talen deal involved an already functioning nuclear power plant, Susquehanna, which meant that diverting a significant portion of its output directly to Amazon's data center could have affected the overall power supply available to the regional grid. This raised concerns with FERC about potential higher consumer electricity prices and compromised grid reliability due to reduced energy availability for public consumption.On the other hand, the Constellation Energy and Microsoft deal involves restarting the Crane Clean Energy Center (formerly Three Mile Island Unit 1), which is not currently operational. Bringing an inactive facility back online to supply power should not negatively impact existing consumer prices or grid reliability, as it would effectively add new energy capacity to the grid. This approach is less likely to draw regulatory pushback for impacting current grid stability or consumer costs since it introduces additional power rather than reallocating existing supply.
CEG Next week will be crucial to see if it can successfully break through the key resistance level, or if it will pull back for another consolidation before attempting again.