Rising demand from data centers will lead to increased investment in transmission in PPL’s utility territories, and the company is even working to serve Data Center Alley in Northern Virginia with a competitive transmission project, executives said May 1 during a first-quarter earnings call.
“We continue to advance plans to support prospective data center development in both Pennsylvania and Kentucky,” PPL CEO Vincent Sorgi said. “As we work with data center companies, we feel we are very well positioned to serve their needs for a variety of reasons. For starters, we have capacity on our grids such that the needed investment by the data centers is not too significant.”
That allows them to connect to the grid quickly, in line with their desired commercial operation dates. Both Pennsylvania and Kentucky have cheap land for the facilities, while Rhode Island Energy is near major population centers in New England.
“In Pennsylvania, we continue to see record numbers of requests within our service territory, including some very large centers that are projecting more than a gigawatt of load at full capacity,” Sorgi said. “We currently have approximately 3 GW of data center demand in advanced stages. The potential upside for PPL comes in the form of additional required investments in transmission and returns on the related rate base through the FERC formula rate.”
Sorgi said that 3 GW should come online beginning in 2026. The power purchase agreements with those facilities enable PPL to begin readying its system, and it would be reimbursed if they do not go forward.
PPL expects to know more about specific data center projects going forward in its territories later this year and into 2025.
Each planned data center now would require $50 million to $150 million in investments depending on its size and specific needs. Every $125 million in investment translates into earnings per share of 1 cent, Sorgi said.
Current customers in Pennsylvania should benefit from the additional data centers because they will spread the cost of transmission across a wider rate base, he added.
“The more significant upside potential from additional data center to demand is due to the vertically integrated nature of our Kentucky business,” Sorgi said. “A significant ramp in electricity demand could also result in incremental generation needs in our service territory. Any additional generation investment would also represent upside to our current capital plan.”
The data centers proposed in Kentucky are smaller and would only require PPL to spend $25 million to $75 million on its wires, but the chance for new generation, likely a new combined cycle natural gas plant, makes them potentially more profitable than the Pennsylvania projects, Sorgi said.
PPL also was awarded a $100 million to $150 million project under a competitive transmission process to serve some of the major data center load in Northern Virginia, where PJM is expecting 7,500 MW of new demand later this decade, Sorgi said. (See PJM Board Approves $5 Billion Transmission Expansion.)
Data Center Alley shows that the facilities tend to co-locate, Sorgi said, and PPL expects that trend to repeat around the country as more facilities are needed to meet artificial-intelligence applications’ growing demand for computing power.
“It’s not necessarily just one-and-done,” he added. “If they can build one there, their intention is to expand upon that. And so, I think you’ll start to see data center hubs start to get created around the country. Obviously, there’s economies of scale if they’re kind of bundling together, and … that creates a demand for transmission into those areas.”
PPL reported $307 million ($0.42/share) in net income for the first quarter, a 7.7% increase from the same period last year, off a 4.6% decrease in total revenue, at $2.304 billion.
