Talen Energy Acquires Two CCGT Plants in US for $3.5bn, Enhancing Fleet and Free Cash Flow

Talen Energy is acquiring two CCGT plants in the US for $3.5bn. The plants are Caithness Energy's Moxie Freedom Energy Centre and BlackRock's Guernsey Power Station. The deal enhances Talen's free cash flow per share by over 40% in 2026 and exceeds 50% through to 2029. The acquisition expands Talen's fleet and increases its annual generation capacity from 40 TWh to 60 TWh, strengthening its capacity to provide reliable low-carbon energy solutions for data centres and large commercial clients.

Houston, July 2, 2025 — Talen Energy Corporation (NASDAQ: TLN), a leading independent power producer, has announced the acquisition of two combined-cycle gas-fired plants (CCGTs) in the United States. The plants, Caithness Energy's Moxie Freedom Energy Center in Pennsylvania and BlackRock's Guernsey Power Station in Ohio, are both located within the PJM power market. The total acquisition price is $3.5 billion after adjusting for estimated tax benefits, or approximately $3.8 billion gross [1].

The acquisition reflects an attractive acquisition multiple of 6.7x 2026 EV/EBITDA for two of the most efficient natural gas plants in PJM, at a material discount to current new-build CCGT costs. The transaction is expected to be immediately accretive to free cash flow per share by over 40% in 2026, and over 50% through 2029 [1].

The acquisition expands Talen's fleet by adding modern, highly efficient baseload H-class CCGTs. The plants have an average heat rate of 6,550 Btu/kWh, resulting in significant energy margin and strong cash flow conversion. Talen's annual generation capacity is expected to increase from approximately 40 TWh to 60 TWh, strengthening its ability to provide reliable low-carbon energy solutions for data centers and large commercial clients [1].

The plants benefit from an advantageous location and reliable access to gas pipeline infrastructure from the Marcellus and Utica shale formations, with their rich natural gas reserves and interconnects to primary natural gas pipelines. This access ensures a stable and cost-effective supply of natural gas for the plants [1].

Talen Energy expects to issue approximately $3.8 billion in new debt to fund the acquisitions and refinance target debt, using both secured and unsecured instruments. The transactions are expected to close in Q4 2025, subject to customary closing conditions and regulatory approvals [1].

Mac McFarland, Talen President and Chief Executive Officer, stated, "This acquisition enhances Talen’s fleet by selectively adding modern, highly efficient baseload H-class CCGTs in Talen’s key markets, where we are an innovator in data center contracting. The transaction is immediately and highly accretive, maintains our balance sheet discipline, and adds more than the equivalent of another Susquehanna nuclear plant to our platform, further enabling large load service" [1].

The acquisition supports a target of approximately $500 million of annual share repurchases through the 2026 deleveraging period, with an aimed return to capital allocation of 70% of adjusted free cash flow thereafter [1].

References:
[1] https://ir.talenenergy.com/news-releases/news-release-details/talen-energy-expands-and-enhances-portfolio-best-class-ccgt
[2] https://finance.yahoo.com/news/talen-energy-expands-enhances-portfolio-200100736.html