Constellation Energy Explores Hybrid PJM Deals and 5 GW Capacity Potential in Q2 2026

Hybrid (batteries plus generation) deals in PJM alongside the bilateral process—and the potential for the “5 GW” eligible new capacity

1) Are hybrid deals possible in PJM while Constellation is engaged in the bilateral process?

Yes—management indicates “hybrid solutions” (mixing new capacity like batteries with existing generation and co-locating with load) are actively viewed as part of the contracting pathway, even as PJM’s bilateral matchmaking process continues. ¹

• In the context of PJM’s contracting environment, management explicitly frames “hybrid solutions” as “the promise we see going forward” and gives an example of adding batteries and other devices to existing operating generation facilities, then co-locating load at that interconnection point. ¹
• Management also describes that the bilateral process is confidential, but advises that “all of the opportunities we have to add megawatts” are being discussed in combination with existing capabilities. ²
• Management further emphasizes that existing megawatts and new capacity are not “completely bifurcated” in real customer procurement strategies; instead, customers consider “existing and new” together (with the backstop auction as just one avenue). ³⁴

Implication for your question: Hybrid deals appear compatible with (not excluded by) the bilateral process, because the bilateral matchmaking is described as packaging new megawatts with existing assets/capabilities, and the company separately highlights hybrid co-location as a forward-looking solution under the evolving PJM/FERC framework. ²³¹⁴

2) What is the potential for the “5 GW of eligible new capacity” referenced on the last call?

The excerpts do not provide a numeric breakdown or a quantified probability that the referenced “5 gigawatts of new capacity” will be procured or that it will definitively clear in PJM. The question asked on the call is whether the 5 GW is “eligible” in the context of addressing “nonpeak issues,” but management’s response in the provided excerpts focuses more on how capacity opportunities fit into the market and on regulatory/contracting pathways than on confirming a specific 5 GW take-rate. ⁵²

That said, the excerpted discussion gives several constraints and conditions that shape the practical potential of that “5 GW”:

2.1 The company’s thesis: more usable capacity (especially stranded capacity) reduces capacity price dependence over time

Management argues the “best outcome” is leveraging stranded capacity (wires plus generation capacity) because it is fast and reduces costs via fixed-cost spreading and capacity-price dynamics. ²

• They describe that in PJM capacity markets (“missing money”), capacity prices depend on the gap between build/operate costs and energy-market revenues. ²
• They argue that more efficient utilization of existing generators makes the capacity payment less important over time, and they observe that when energy/ancillary services go up, capacity prices go down. ²

Implication: If the “5 GW” eligible new capacity is intended to increase effective capacity availability (and help with reliability, including nonpeak issues), that would align with management’s view that utilization and market interactions can reduce overall capacity-cost pressure. ²

2.2 Peak vs. energy: they frame the need as a peak capacity concern

Management explicitly states that unused capacity is available over 99% of the hours, and that the issue is “a peak capacity concern, not an energy concern.” ⁶

• This matters because it suggests that eligible new capacity (whether batteries, generation additions, demand response, etc.) is primarily valuable for meeting a limited number of peak hours and related reliability requirements. ⁶²

Implication: If “5 GW eligible” refers to capacity that can qualify under PJM rules for reliability/curtailment frameworks, the realizable value is likely tied to how those resources perform during peak hours and how qualification rules treat curtailment/backup obligations (especially for co-located load scenarios). ⁶⁷

2.3 Regulatory clarity is a key gating factor for contracting and how much of eligible capacity can be monetized

Management stresses that PJM and FERC progress and clarity improve the ability for customers and suppliers to make investment decisions. ⁶⁸

• They cite PJM establishing a target of 6.8 GW for reliability backstop procurement (RBP), while Constellation is in the bilateral matchmaking process. ⁶
• They also describe an EPA-related clarification path concerning curtailments/backup generator limits for data centers that could “unlock meaningful optionality,” indicating that regulatory specifics can materially change what capacity configurations can realistically be used. ⁶⁷

Implication: The potential of the “5 GW eligible” concept is therefore less about theoretical eligibility and more about whether the regulatory design (PJM/FERC proposals and relevant backup/curtailment rules) allows hybrid/co-located configurations to qualify and be contracted with confidence. ⁶¹⁴

Bottom line (directly answering both parts)

• Hybrid deals are possible alongside the bilateral process in PJM: management describes “hybrid solutions” (batteries plus other capacity co-located with load at an existing generation interconnection point) as a forward-looking approach, and it characterizes the bilateral process as involving megawatt additions packaged with existing capabilities. ²¹
• Potential for the “5 GW of eligible new capacity”: the excerpts indicate the concept is under discussion in relation to qualifying new capacity and addressing issues like nonpeak reliability, but they do not quantify how much of that 5 GW is expected to be actually contracted or delivered. ⁵ The company’s discussion suggests realized value depends on market rule clarity, peak-hour qualification/curtailment frameworks, and packaging new capacity with existing stranded assets. ⁶²⁷¹

If you want, I can also map the excerpts into a mechanism view (what needs to be true in PJM/FERC/EPA rules for hybrid/bilateral capacity to monetize), but the provided text already supports that regulatory/qualification specifics and peak-hour adequacy are the key determinants rather than a guaranteed procurement outcome for the “5 GW.” ⁶¹⁷