Talen Energy plans to purchase three gas-fired power plants in the PJM Interconnection from Energy Capital Partners for $3.45 billion, the companies said Thursday. The transaction involves 2,567 MW of capacity.
The facilities include a 480-MW combustion turbine plant in Mount Sterling, Ohio, a 1,218-MW combined cycle plant in Lawrenceburg, Indiana, and an 869-MW combined cycle plant in Waterford, Ohio.
This announcement occurs during a period of consolidation in the power sector. Other recent deals include NRG Energy's planned acquisition of LS Power's gas-fired fleet and Constellation Energy's purchase of Calpine.
Simultaneously, the U.S. Department of Justice is examining these transactions over market power concerns. Constellation, for instance, agreed with the DOJ to sell more capacity than the Federal Energy Regulatory Commission required. FERC approved the NRG deal in November, but the DOJ appears to be scrutinizing it, according to a December 19 disclosure by PJM's market monitor.
Talen, based in Houston, stated in an investor presentation that the planned deal enhances its overall scale, particularly in western PJM, which benefits from data center growth and reliable access to low-cost natural gas. Talen currently owns about 13,110 MW, mostly within PJM's footprint. This includes two Maryland power plants totaling 1,975 MW that Talen plans to retire but are operating under must-run reliability contracts.
The Lawrenceburg and Waterford plants operated at roughly 87% capacity factors in 2024, while the Darby plant had a nearly 13% capacity factor, producing 15,715 GWh, Talen said.
Payment for the plants will consist of $2.55 billion in cash, 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 of this year. It requires standard approvals, including from FERC. The Indiana Utility Regulatory Commission must also approve the sale of the Lawrenceburg plant.
Following the announcement, Moody's Ratings affirmed its existing below-investment-grade ratings for Talen Energy Supply and maintained a negative outlook. Moody's said the negative outlook reflects Talen's "persistently weak" funds-from-operations-to-debt ratios since emerging from bankruptcy in May 2023.
Moody's noted the deal increases Talen's scale and asset diversification, reducing reliance on the 2.2-GW Susquehanna nuclear plant. However, the ratings agency stated the transaction has a neutral effect on Talen's overall business profile because the Energy Capital Partners portfolio is highly exposed to the PJM wholesale market. Moody's also said the three plants are relatively old and will likely require elevated capital investments.