PPL Corp Partners with Blackstone to Meet Growing Energy Demands with Data Center Power Plants

PPL Corp partners with Blackstone Infrastructure to construct gas-fired power plants for data centers in Pennsylvania, addressing a potential 6 GW energy deficit. Analysts predict an average stock price increase of around 5.40% within the next year, with a one-year average price target of $37.55. GuruFocus estimates imply a slight downside in stock value, with a potential downside of 5.29% from the current price.

PPL Corp. and Blackstone Infrastructure have formed a joint venture to construct gas-fired power plants specifically designed to meet the growing electricity demands of data centers in Pennsylvania. The initiative aims to address a projected 6 GW generation shortfall in the state, which is expected to be met by a combination of the joint venture, independent power producers, and potentially PPL Electric Utilities if legislation is passed.

The joint venture, which holds a 51/49 partnership with PPL as the majority stakeholder, will focus on developing generation facilities in Pennsylvania, particularly in areas with significant gas pipeline capacity and high data center interest. The venture has secured multiple land parcels to enable the generation buildout, but no energy service agreements with hyperscalers have been signed yet. The first power plants are expected to be operational by 2031.

Analysts predict an average stock price increase of around 5.40% within the next year for PPL Corp., with a one-year average price target of $37.55. This positive outlook is driven by the strategic partnership and the potential to mitigate the energy deficit in Pennsylvania. However, GuruFocus estimates imply a slight downside in stock value, with a potential downside of 5.29% from the current price.

The joint venture is designed to have regulated-like risk profiles, avoiding exposure to merchant energy and capacity price volatility. This aligns well with PPL’s historically low volatility profile, evidenced by its beta of 0.65. The companies emphasized that meeting the unprecedented demand growth from data centers will require multiple approaches, including the pending Pennsylvania legislation that would allow utilities to invest in, own, and operate generation again.

In other news from the Pennsylvania Energy and Innovation Summit, Constellation Energy Group indicated plans to spend $2.4 billion to add 340 MW to its Limerick nuclear power plant in Pottstown, Pennsylvania. The Frontier Group plans to convert the Bruce Mansfield coal-fired power plant in Shippingport, Pennsylvania, into a significantly larger gas-fired power plant with added onsite generation. Capital Power also plans to spend $1 billion over 10 years to upgrade and expand its Hummel power plant in Shamokin Dam, Pennsylvania.

Morningstar analysts expect data center load to roughly triple to about 80 GW by 2030, with 60% of the new demand met by gas-fired generation, 25% by renewable energy additions, and 15% by nuclear restarts and expansions.

References:
[1] https://www.utilitydive.com/news/ppl-blackstone-pennsylvania-data-center-gas-power-plant/753295/
[2] https://www.investing.com/news/company-news/ppl-and-blackstone-form-joint-venture-to-build-gas-plants-for-data-centers-93CH-4136444
[3] https://www.gurufocus.com/news/2979406/ppl-corp-ppl-forms-joint-venture-with-blackstone?mobile=true