Talen Focuses on Data Center Demand as It Considers Cutting Cryptocurrency Business

NEW YORK (Reuters) – Talen Energy is focusing on meeting growing demand from data center developers as the independent energy company looks to exit its cryptocurrency mining business, company executives said on Tuesday.

Talen is one of a group of U.S. energy companies capitalizing on the energy demands of AI- and cloud-based data centers. Talen shares are up nearly 100% year to date.

“It’s not a strategic asset for us and we’re looking at… other alternatives,” Talen Energy CEO Mark McFarland said of the cryptocurrency mining business during a second-quarter earnings conference call.

Reuters reported earlier this month that Talen was considering selling its stake in a bitcoin mining hub on the site of a Pennsylvania nuclear power plant.

Talen raised its profit and free cash flow forecasts for the year, benefiting from higher energy consumption and prices, larger payments from regional grid operator PJM Interconnection and a cashout for the data center it sold to Amazon.com earlier this year.

Talen revised its 2024 adjusted EBITDA range to $720 million to $780 million, from $600 million to $800 million previously. Its free cash flow estimate for the year was revised to $245 million to $285 million, from $160 million to $310 million previously. The company benefited from unseasonably warm weather in the three months ended June 30, among other factors.

Talen expects to generate USD 670 million in capacity revenue in the 2025/2026 planning year, up USD 470 million from the previous year, as a result of the PJM capacity auction.

Talen also plans to release $300 million in escrow for Amazon’s data center campus in the third quarter.

The data center is at the center of a dispute between Talen and regulated utilities American Electric Power and Exelon, which say expanding the center to connect it to the grid could raise energy costs for everyday customers.

The Federal Energy Regulatory Commission (FERC) is reviewing the revised Interconnection Services Agreement for the data center and will hold a technical conference in the fall that will expand on the issue of so-called co-located data centers, in which data centers are located at the sites of the power plants that power them.

McFarland expressed optimism that FERC will approve the amended agreement.

(Reporting by Laila Kearney; Editing by Emelia Sithole-Matarise and Leslie Adler)