Exelon plans to invest nearly $5 billion in what it called “cost-effective, clean energy projects” starting this year. The investment will pay for energy efficiency and smart grid programs and renewable energy projects, though a majority of funds—up to $3 billion—will be spent on increasing output at the company’s nuclear plants.

The investment is part of a strategy to eliminate the equivalent of the company’s 2001 carbon footprint by 2020. Plans also call for the closure of four “inefficient, carbon-intensive” fossil units in Pennsylvania that have a combined capacity of 933 MW, the company said on Tuesday.

Exelon said the investments were made in light of proposed Environmental Protection Agency (EPA) rules to cut air pollution. An annual analysis of cost-effective ways to reduce carbon emissions had found that “participants in PJM—the 13-state mid-Atlantic power market in which Exelon operates—can cut about 60 million metric tons of carbon emissions per year through energy efficiency, nuclear uprates, coal plant retirements and new natural gas generation,” it said.

“The question facing the United States is not whether it should reduce air pollution and carbon emissions, but how to do so affordably, especially in light of current economic conditions,” Exelon CEO John Rowe said. “The pending suite of EPA regulations will help drive the transition to a cleaner energy future.”

The $5 billion will be spent between 2010 and 2015 and is expected to result in new material and equipment orders, engineering and construction contracts, and professional and technical service agreements, Exelon said.

The company that owns the nation’s largest fleet of nuclear reactors said it had already boosted output at plants by 100 MW and additional future uprates were planned. Exelon also said it would spend $1.5 billion on renewable energy purchases, including $900 million on the John Deere’s 735-MW wind power division. A 10-MW solar plant on Chicago’s South Side is also in the pipeline.

About $500 million will be spent on energy efficiency programs for ComEd and PECO customers, as well as on smart grid initiatives in Chicago and Pennsylvania. Plans call for the deployment of 720,000 smart meters, some for which Exelon will charge customers through electricity rates.

Sources: POWERnews, Exelon