Flywheel still in the direction of travel; mgmt. meetings

Research evidence excerpt

Flywheel still in the direction of travel; mgmt. meetings

June 23, 2026

Investment Conclusion

First of its kind play on nuclear's value to data center development

Talen is well-positioned in today's market that is hyper-focused on data center growth tied to AI, which is set to

result in unprecedented power demand. TLN was a first-mover in building an on-site data center shell behind-the-

meter at its Susquehanna nuclear plant campus. They've now successfully navigated some of the regulatory hurdles

and moved on to an even better deal with Amazon's AWS than originally announced in March 2024. The new deal

shifts to a front-of-the-meter configuration that has wide stakeholder support without the need for FERC approval.

Importantly, it also doubles in size from the original agreement to 1,920 MWs. Finally, it results in similar net pricing

to TLN, which implies a meaningful premium over current energy/capacity forwards. Having a blue chip hyperscaler

commit to a long-dated contract through at least 2042 significantly reduces the company's risk profile, while likely

also creating incremental leverage capacity given the meaningfully contracted nature of TLN's cash flows. TLN's

recent acquisition of the 2 Caithness CCGTs was done at a reasonable multiple, followed quickly by an announcement

to acquire 3 PJM gas plants from ECP/Cornerstone. Both drive significant accretion, while building an even bigger/

better platform for using its first-mover advantage to contract with large data center customers. The remaining PJM

fossil fleet is increasing in value as well, as the power market is tightening and a supply response is long-dated. We're

not surprised to see TLN join the growing M&A thematic in the space, as they were relatively subscale and heavily

levered to one asset.