Constellation Closes $26.6 Billion Calpine Deal, Becoming America’s Largest Power Generator

When regulators in Washington signed off on a stack of legal documents this month, they cleared the way for a deal that will reshape who controls the flow of electricity across much of the United States.

On Jan. 7, Constellation Energy Corp. completed its acquisition of Calpine Corp., closing a transaction valued at about $26.6 billion including debt and vaulting the Baltimore-based company into the top spot as the nation’s largest power generator by capacity.

The merger unites Constellation’s nuclear-heavy, largely carbon-free fleet with Calpine’s sprawling network of natural gas plants and a major geothermal complex in California. The combined company now controls roughly 55 gigawatts of generating capacity and serves an estimated 2.5 million retail and business customers, with a heavy footprint in Texas, the Mid-Atlantic and California.

Constellation is pitching the deal as a way to keep up with surging electricity demand from data centers, artificial intelligence, electric vehicles and onshored manufacturing, while maintaining reliability and advancing climate goals. Federal antitrust officials allowed it to proceed only after requiring the divestiture of six power plants in two competitive regions where they said the company could otherwise influence prices.

“We are strengthening America’s future by providing the reliable, clean energy that keeps our communities strong, our businesses competitive and our nation secure,” Constellation President and CEO Joe Dominguez said in a statement announcing the closing.

A clean-energy leader buys a gas giant

Constellation launched as a standalone publicly traded company in February 2022 after being spun off from Exelon Corp. It inherited the nation’s largest fleet of nuclear reactors and built its brand on being what it called the largest U.S. producer of carbon-free energy. Before the Calpine deal, Constellation said nearly 90% of its generation output was emissions-free, primarily from nuclear, along with hydro, wind and solar.

Based in Houston, Calpine brought a different profile. Long known as the country’s largest generator from natural gas and geothermal resources, it operates scores of combined-cycle gas plants and peaking units across competitive markets, plus the Geysers field in Northern California, billed as the world’s largest geothermal complex.

Calpine was taken private in 2017 in a deal led by private equity firm Energy Capital Partners (ECP) alongside Access Industries and Canada Pension Plan Investment Board. That transaction valued the equity at about $5.6 billion. Selling to Constellation at an enterprise value of roughly $26.6 billion represents one of the largest private equity exits in the U.S. power sector in recent years.

“The combination validates our vision of investing in critical energy infrastructure that supports reliability for customers and communities,” ECP managing partner Tyler Reeder said in a statement.

Deal structure and new ownership

Under the merger agreement first announced on Jan. 10, 2025, Constellation is paying about $16.4 billion for Calpine’s equity, using a mix of stock and cash. The package includes roughly 50 million newly issued Constellation shares and $4.5 billion in cash, based on deal documents. Constellation is also assuming about $12.7 billion of Calpine’s net debt.

The company’s latest filings describe a net purchase price of about $26.6 billion, or about 7.9 times Calpine’s projected 2026 earnings before interest, taxes, depreciation and amortization. Because Constellation’s share price has risen since the agreement was signed, some analysts now characterize the total package, including debt, as exceeding $30 billion.

Calpine is now a wholly owned subsidiary of Constellation. Former Calpine owners, primarily the ECP-led investor group, hold roughly 13.8% of Constellation’s outstanding common stock, subject to lock-up agreements that limit how quickly they can sell.

Constellation has said the acquisition will immediately boost its earnings and free cash flow. At the time of the announcement, the company projected more than $2 billion in additional annual free cash flow after integration.

A fleet built for the AI era

The deal closes as forecasters and utilities revise up long-term electricity demand projections for the first time in years. Data centers supporting cloud computing, AI workloads and streaming, along with battery manufacturing, semiconductor fabs and other energy-intensive facilities encouraged by federal industrial policies, are driving much of the increase.

Dominguez has said demand for the company’s products is growing at levels “we haven’t seen in a lifetime.” Constellation already supplies power and tailored clean energy contracts to a large share of the Fortune 100 as well as federal agencies, and has struck high-profile agreements with technology companies seeking 24-hour carbon-free electricity.

By adding Calpine’s gas and geothermal resources, Constellation gains more flexible capacity in markets where data center growth is most pronounced, including Texas and Northern Virginia through the PJM Interconnection region. The company says the combination will allow it to offer more firm, around-the-clock power to large customers while balancing intermittent wind and solar resources.

Company materials describe the enlarged fleet as a platform for future investments in advanced nuclear reactors, carbon capture and storage at gas plants, expanded geothermal and long-duration energy storage.

Antitrust concerns and plant sales

The size and reach of the merged company drew close scrutiny from federal and state regulators.

The Federal Energy Regulatory Commission approved the deal in July 2025, conditioned on the sale of four gas-fired power plants Calpine owns in PJM’s Mid-Atlantic region: Hay Road and Edge Moor in Delaware, and the Bethlehem and York Energy Center facilities in Pennsylvania.

In December, the U.S. Department of Justice and the Texas attorney general filed a civil antitrust complaint in federal court, alleging that, without additional divestitures, the transaction would harm competition in two regional markets: the Electric Reliability Council of Texas (ERCOT) and PJM’s coastal Mid-Atlantic zone.

The Justice Department said that by combining large portfolios of plants that frequently set the market price for electricity, the deal would make it easier and more profitable for Constellation to withhold generation to drive up wholesale prices during periods of tight supply.

“The proposed acquisition, as originally structured, would have increased the likelihood that tens of millions of electricity consumers in Texas and the Mid-Atlantic region would pay higher prices for power,” Assistant Attorney General Jonathan Kanter, who heads the department’s Antitrust Division, said when announcing the settlement.

To resolve the case, Constellation agreed to divest six facilities: the Bethlehem plant, the York Energy Center units, Hay Road and Edge Moor in PJM, along with the Jack A. Fusco Energy Center near Houston and a minority stake in the Gregory plant near Corpus Christi in ERCOT. The consent decree also includes hold-separate and transition provisions.

The settlement is the first Justice Department electricity-merger consent decree in 14 years. It remains subject to public comment and court approval under the Tunney Act, but regulators allowed the merger to close while that process continues.

State regulators in Texas and New York also signed off on the combination in 2025, after reviewing its effects on retail competition, reliability and clean energy goals.

Climate and reliability questions

The acquisition complicates Constellation’s image as a predominantly emissions-free generator even as it increases the company’s overall supply of zero-carbon power.

Before the deal, Constellation said it generated about 10% of the nation’s clean energy, largely from nuclear, and had committed to supplying 95% carbon-free power by 2030 and 100% by 2040. Adding Calpine’s fleet of natural gas plants will increase its fossil-fueled output, at least in the near term, while also incorporating Calpine’s geothermal production.

Company executives argue that flexible gas-fired generation will remain essential for grid reliability as wind and solar expand and as demand from AI and electrification grows. They say the combined portfolio will allow them to retire older, less efficient units over time and invest in cleaner technologies.

Environmental advocates and some policy analysts have questioned whether expanding gas capacity aligns with long-term climate targets, warning that new or upgraded plants could operate for decades unless subject to stricter emissions rules.

A turning point for the power business

The Constellation-Calpine deal highlights a broader shift in the U.S. power sector, as large generators and retailers race to secure control over “firm” capacity that can run whenever needed, and as antitrust enforcers reassert oversight over who owns that capacity.

Other companies are moving in the same direction. Shortly before Constellation closed its deal, Texas-based Vistra Corp. agreed to buy independent power producer Cogentrix Energy for roughly $4 billion, adding more than 5 gigawatts of gas-fired capacity.

For now, Constellation emerges as the industry’s largest player, with assets stretching from nuclear stations in Illinois and New York to gas and geothermal plants in Texas and California. Its ability to integrate Calpine’s merchant culture, manage a larger debt load and maintain both competitive prices and climate commitments will be closely watched by regulators, investors and large power buyers.

As more data centers, factories and electric vehicle fleets come online later this decade, a significant share of their electricity is likely to come from the combined company’s plants. Whether that power proves as reliable, low-carbon and affordable as promised will help determine how—and by whom—the next phase of the U.S. digital and industrial economy is powered.