Constellation to Acquire Rhode Island State Energy Center for $715 Million
Constellation (Nasdaq: CEG) has agreed to acquire 100% of RISEC Holdings, LLC (RISEC), the owner of the Rhode Island State Energy Center, from Shell Energy North America (US), L.P. (SENA), a subsidiary of Shell plc. The transaction, valued at $715 million and subject to customary purchase price adjustments, will add a 609-megawatt natural gas-fired generation facility to Constellation’s merchant power portfolio.
The acquisition expands Constellation’s presence in the New England electricity market and provides the company with additional generation capacity in a region where electricity demand and grid requirements continue to evolve. The transaction also brings an operating asset into Constellation’s portfolio that is positioned to participate in the competitive wholesale power market administered by ISO New England.
Located in Johnston, Rhode Island, the Rhode Island State Energy Center is a combined-cycle electric generation facility fueled by natural gas. The plant consists of two combustion turbines and one steam turbine and can generate up to 609 megawatts of electricity. Its output is sold through the competitive ISO New England wholesale power market, where the facility participates in both electricity and capacity markets.
Constellation said the acquisition is expected to complement its existing customer-focused business in New England. The company views the facility’s location and infrastructure connections as important advantages, particularly as electricity demand across the region develops and the reliability of the power system remains a key consideration for businesses, households and grid operators.
“The Rhode Island State Energy Center is a high-performing asset that perfectly complements Constellation’s extraordinarily successful customer business in New England,” said Joe Dominguez, chairman, president and chief executive officer of Constellation. “As Constellation’s business in New England grows, we need a reliable asset that is well-positioned on both the electric grid and the natural gas pipeline system. RISEC checks all of these boxes and will be immediately accretive to Constellation’s business plan. We look forward to closing the transaction and to begin working with the fantastic team at RISEC to build on the plant’s strong operating record as we power families and businesses across New England.”
The Rhode Island State Energy Center has served the New England power grid since 2002. Over more than two decades of operation, the facility has become part of the region’s generation infrastructure, supplying electricity and capacity through ISO New England’s competitive wholesale market.
The plant’s combined-cycle configuration is designed to make more effective use of the fuel consumed during electricity generation. In a combined-cycle facility, combustion turbines generate electricity while producing heat. Instead of allowing that heat to go unused, the system captures and reuses it to produce steam, which then drives a separate steam turbine to generate additional electricity.
This configuration allows combined-cycle plants to achieve greater efficiency than traditional single-cycle natural gas generation facilities. The technology can therefore produce electricity with lower emissions intensity than a conventional single-cycle natural gas plant, while providing dispatchable generation that can respond to changing electricity system requirements.
For Constellation, the addition of RISEC represents an expansion of its generation portfolio in a market where natural gas-fired facilities can provide operational flexibility alongside other forms of generation. The company has emphasized the importance of having generation resources that are well positioned relative to both the electric transmission system and natural gas pipeline infrastructure.
Financially, Constellation said the $715 million purchase price equates to approximately $580 million after taking into account expected first-year tax benefits. The company expects the transaction to be immediately accretive to operating earnings.
Constellation also said the acquisition is expected to generate returns above its 10% unlevered return threshold. The company indicated that the transaction will not affect its ability to execute its previously authorized $5 billion share repurchase program through the end of 2027.
The financial characteristics of the transaction are intended to support Constellation’s broader capital allocation strategy while adding an operating generation asset to its portfolio. By acquiring an established facility rather than developing a new generation project, the company will gain ownership of an asset that has already been operating in the New England market since 2002.
The acquisition also aligns with Constellation’s broader strategy of expanding its generation capabilities in markets where it sees opportunities to support customers and electricity demand. The company’s customer business in New England provides a commercial platform that can be complemented by ownership of generation assets participating in regional wholesale markets.
RISEC’s location in Johnston is another consideration in the transaction. Constellation said the facility is well positioned on both the regional electric grid and the natural gas pipeline system. Access to these infrastructure networks is important for a natural gas-fired generation facility because reliable fuel supply and grid connectivity are central to maintaining dependable generation operations.
The transaction remains subject to customary regulatory approvals and other closing conditions. Until those conditions are satisfied and the acquisition closes, the Rhode Island State Energy Center will continue operating under its existing ownership by RISEC and Shell Energy North America.
Following completion of the transaction, Constellation is expected to incorporate RISEC into its merchant generation portfolio. The company said it looks forward to working with the existing RISEC team and building on the facility’s operating record.
The acquisition comes as power markets across the United States continue to face changing demand patterns and evolving requirements for reliable electricity supply. In New England, generation resources capable of supplying electricity into the wholesale market remain an important component of the region’s overall power system.
With a generating capability of up to 609 megawatts, RISEC will provide Constellation with a significant additional generation resource in the region. Its combined-cycle technology also gives the facility an efficiency advantage over traditional single-cycle natural gas plants, while its established market position provides an existing pathway for selling electricity and capacity.
The $715 million transaction therefore combines an established generation asset, a strategic New England location and expected financial benefits for Constellation. The company expects the acquisition to be immediately accretive to operating earnings, produce returns above its targeted unlevered threshold and proceed without disrupting its planned $5 billion share repurchase authorization.
The closing of the acquisition will depend on the completion of the required regulatory review and satisfaction of customary conditions. Until then, the Rhode Island State Energy Center will remain under its current ownership and continue serving the New England power grid.
Once completed, the acquisition will further strengthen Constellation’s generation portfolio in New England and give the company ownership of a long-operating combined-cycle natural gas facility with access to both regional electricity markets and natural gas infrastructure.
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