With Blackstone venture, PPL emerges ‘biggest winner’ from data center summit

• Utility company PPL Corp. is the “biggest winner” from the Pennsylvania Energy and Innovation Summit in Pittsburgh this week with its joint venture with Blackstone Infrastructure to build gas-fired power plants to serve data centers in Pennsylvania and across the PJM Interconnection, Jefferies analysts said Wednesday.
• PPL and Blackstone are negotiating with multiple potential hyperscale counterparties, according to the analysts, who noted that any new power plants would be operating by 2030 at the earliest.
• “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; however, no [energy services agreements] with hyperscalers have been signed to date,” PPL said Tuesday.

Plans to build gas-fired generation in Pennsylvania comes amid a surge in data center development across the United States, fueled in part by a race to develop artificial intelligence capacity.

In PPL Electric Utilities' service territory in Pennsylvania, there is more than 13 GW of potential data center load in advanced stages of planning, according to PPL. If all those data centers are built, there would be a 6 GW generation shortfall in PPL Electric Utilities' service territory in the next five to six years, PPL said.

It would cost about $15 billion to build enough gas-fired, combined-cycle units to meet the shortfall, PPL said, noting that it expects the power plants would be built by the joint venture, independent power producers and — if legislation is passed to change Pennsylvania law — PPL Electric Utilities.

Blackstone said it 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, the private equity firm said.

PPL owns 51% of the joint venture, with Blackstone Infrastructure owning the rest.

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, depending on data center interest, Morgan Stanley analysts said Wednesday.

“As long as the contracts that get signed have strict risk parameters that make the financial arrangements 'utility-like,' we think the earnings upside would be attractive for investors, and this approach makes sense as an effort to boost grid reliability,” the analysts said.

In other news from the Pennsylvania summit, Constellation Energy Group indicated it plans to spend $2.4 billion to add 340 MW to its 2,317-MW Limerick nuclear power plant in Pottstown, Pennsylvania.

The Frontier Group plans to convert the former 2.7-GW, coal-fired Bruce Mansfield power plant in Shippingport, Pennsylvania, into a “significantly larger” gas-fired power plant with added onsite generation, according to the Buffalo, New York-based company. The company said it has a partner to build a colocated data center at the site.

Also, Capital Power said it plans to spend $1 billion over 10 years to upgrade and expand its 1,124-MW gas-fired Hummel power plant in Shamokin Dam, Pennsylvania.

Meanwhile, Morningstar analysts expect data center load will roughly triple to about 80 GW by 2030, at least 20% below some estimates, according to a report released Wednesday. The more aggressive forecasts overlook the practical limitations of building large-scale infrastructure and underestimate the rising energy efficiency of AI chips, the analysts said. Load growth projections vary greatly.

Morningstar expects that 60% of the new data center demand will be met by gas-fired generation, 25% by renewable energy additions and 15% by nuclear restarts and expansions. New nuclear, including small modular reactors, aren’t an option until the early 2030s at the earliest, according to the report.

“Renewables are advantaged by their attractive economics, quick time to power, and zero carbon emissions,” the Morningstar analysts said. “So, we expect rising power demand from AI to drive incremental demand for new wind, solar, and battery storage generation.”