PPL, Blackstone form joint venture for Pennsylvania data center power generation.

PPL Corporation and Blackstone Infrastructure have formed a joint venture to build new gas-fired generation stations in Pennsylvania to power data centers under long-term energy services agreements. The venture aims to serve the growing data center power needs in the state. The announcement was made at the Pennsylvania Energy and Innovation Summit hosted by Sen. David McCormick.

PPL Corporation and Blackstone Infrastructure have announced the formation of a joint venture to build new gas-fired generation stations in Pennsylvania, with the primary aim of serving the growing data center power needs in the state. The announcement was made at the Pennsylvania Energy and Innovation Summit hosted by Sen. David McCormick.

The joint venture, which includes PPL owning 51% of the interest and Blackstone Infrastructure owning 49%, aims to develop front-of-the-meter generation that sits atop the Marcellus and Utica shale basins. This generation will be capable of quickly connecting to significant, available gas pipeline capacity and targeting areas of significant data center interest [1].

The venture plans to enter into long-term energy services agreements (ESAs) with regulated-like risk profiles that do not expose the companies to merchant energy and capacity price volatility. Construction of new natural gas plants will require the successful execution of ESAs with hyperscalers. The joint venture is actively engaged with landowners, natural gas pipeline companies, and turbine manufacturers, and has secured multiple land parcels to enable this new generation buildout [2].

Within PPL Electric Utilities' service territory in Pennsylvania alone, data center interest has reached over 60 gigawatts (GW) of potential projects, with over 13 GW in advanced stages of planning. If all 13 GW come online, PPL estimates a 6 GW generation shortfall in PPL Electric Utilities' service territories in the next five to six years. That represents about a $15 billion investment need, assuming natural gas combined-cycle units are used to meet this need [2].

Blackstone expects to spend $25 billion on data centers and energy infrastructure in Pennsylvania. QTS, a data center operator backed by Blackstone, has secured land sites across northeastern Pennsylvania for data centers [1]. The joint venture lacks identified customers and gas turbines, and the first power plants likely wouldn't be built until around 2031, so the initiative will have little effect on PPL’s earnings until later in the decade [1].

The joint venture does not lessen the need for additional action to address underlying resource adequacy concerns within PJM. Morningstar analysts expect data center load to roughly triple to about 80 GW by 2030, with 60% of the new data center demand being met by gas-fired generation, 25% by renewable energy additions, and 15% by nuclear restarts and expansions [3].

The initiative is part of a broader strategy by Blackstone to invest over $25 billion to support the build-out of Pennsylvania’s digital and energy infrastructure and help catalyze an additional $60 billion investment into the Commonwealth. This initiative builds on Blackstone’s track record as the leading investor in data centers and power infrastructure [3].

References:
[1] https://www.utilitydive.com/news/ppl-blackstone-pennsylvania-data-center-gas-power-plant/753295/
[2] https://www.marketscreener.com/quote/stock/PPL-CORPORATION-14091/news/PPL-Corporation-and-Blackstone-Infrastructure-Create-Joint-Venture-to-Build-Natural-Gas-Generation-i-50517488/
[3] https://www.blackstone.com/news/press/press-release-template/