Talen Energy plans to buy three gas-fired power plants in the PJM Interconnection from Energy Capital Partners totaling 2,567 MW for $3.45 billion, the companies said Thursday.
The power plants are a 480-MW combustion turbine facility in Mount Sterling, Ohio, a 1,218-MW combined cycle facility in Lawrenceburg, Indiana, and a 869-MW combined cycle facility in Waterford, Ohio.
The announcement comes amid consolidation in the power sector, with NRG Energy planning to buy LS Power’s gas-fired fleet and Constellation Energy buying Calpine, among other deals.
At the same time, the U.S. Department of Justice is scrutinizing those deals over market power concerns. Constellation, for example, in a deal with the DOJ agreed to sell off more capacity than required by the Federal Energy Regulatory Commission. Also, FERC approved the NRG deal in November, but the DOJ appears to be scrutinizing the transaction, according to a Dec. 19 disclosure by PJM’s market monitor.
The planned deal enhances Talen’s overall scale, including in western PJM, which has significant data center tailwinds and reliable access to low-cost natural gas, the Houston-based company said in an investor presentation. Talen owns about 13,110 MW, mainly in PJM’s footprint. That capacity includes two power plants in Maryland totaling 1,975 MW that Talen plans to retire but are running under must-run reliability contracts.
The Lawrenceburg and Waterford plants ran at roughly 87% capacity factors in 2024 and the Darby plant had a nearly 13% capacity factor — producing 15,715 GWh, Talen said.
Talen plans to pay for the power plants with $2.55 billion in cash — to be funded by debt — and $900 million in Talen stock.
Nearly 840 MW of the Lawrenceburg facility’s capacity is under contract to Indiana Michigan Power from June 2028 through May 2034, according to Talen.
Talen expects the deal to close early in the second half this year. The deal faces standard approvals, including from the Federal Energy Regulatory Commission. Also, the Indiana Utility Regulatory Commission must approve the sale of the Lawrenceburg power plant.
After the deal was announced, Moody's Ratings affirmed its existing below investor grade ratings for Talen Energy Supply and said its ratings outlook remains negative.
Talen’s negative outlook reflects the company’s “persistently weak” funds-from-operations-to-debt ratios since emerging from bankruptcy in May 2023, Moody’s said.
The deal increases Talen's scale and asset diversification, which reduces its reliance on the 2.2-GW Susquehanna nuclear plant, Moody’s said.
“However, the transaction has a neutral effect on Talen's overall business profile because the [ECP] portfolio is highly exposed to the PJM wholesale market,” the ratings agency said. Also, the three power plants are relatively old and will likely require elevated capital investments, Moody’s said.
