Initiate on PJM IPPs: Structural supply/demand tightness favors Talen; Buy TLN, Neutral on CEG

Research evidence excerpt

Initiate on PJM IPPs: Structural supply/demand tightness favors Talen; Buy TLN, Neutral on CEG

Equity Research

18 June 2026 | 5:00AM EDT

AMERICAS UTILITIES

Initiate on PJM IPPs: Structural supply/demand tightness favors Talen;

Buy TLN, Neutral on CEG

We initiate coverage of the PJM levered independent power producers (IPPs): Carly Davenport

+1(212)357-1914 |

Talen Energy (TLN, Buy), and Constellation Energy (CEG, Neutral). We are carly.davenport@gs.com

Goldman Sachs & Co. LLC

constructive on the outlook for the PJM market, which is a regional power grid that

Beatriz Abreu, CFAoperates across 13 different states in the Mid-Atlantic and Midwest regions. The PJM +1(212)357-0455 |

grid hosts about ~35% of existing US data center capacity (per 451 Research). This beatriz.abreu@gs.comGoldman Sachs & Co. LLC

heavy concentration, combined with recent power plant retirements and timing Jaya Patel

constraints to build new generation, has tightened the local power supply and +1(212)357-9901Goldman Sachs & Co.| jaya.patel@gs.comLLC

demand. We believe this imbalance will continue into the 2030s. This dynamic has

driven power prices higher in PJM, which benefits owners of existing power

generation assets, like TLN and CEG. While we recognize that PJM still faces some

regulatory uncertainty regarding how data center load will be handled in the

Reliability Backstop Procurement (RBP) guideline decisions, we are optimistic that

upcoming milestones on the emergency capacity auction process will start to lift the

overhang.

We initiate on TLN with a Buy rating, as we believe its 17-year AWS power purchase

agreement (PPA) has structurally de-risked cash flows, its 99% PJM exposure offers

the most direct leverage to tightening fundamentals, and its smaller EBITDA base