Crypto mining on hold as Talen Energy pursues data centres

Data centre development at Talen Energy sparks regulatory review and industry debate.

Talen Energy shifts focus to data centres, considering exit from crypto mining operations.

Talen Energy is shifting its focus towards data centre development, driven by rising demand from AI and cloud computing sectors. The company is considering moving away from its crypto mining operations, which it no longer sees as a strategic asset. This shift comes as Talen’s shares have surged nearly 100% since the start of the year, reflecting the company’s successful adaptation to the growing power needs of data centres.

The company has revised its earnings and free cash flow forecasts upwards, benefiting from increased power usage, higher prices, and payments from PJM Interconnection. The warm weather during the second quarter also contributed to this positive outlook. Talen now expects to generate $720 million to $780 million in adjusted EBITDA for 2024 and has adjusted its free cash flow estimates to between $245 million and $285 million.

Talen is also anticipating $670 million in capacity revenues for the 2025/2026 planning year, a significant increase of $470 million compared to the previous year. The company expects the release of $300 million from an Amazon data centre escrow in the third quarter. The data centre development is under scrutiny from regulated utilities concerned about potential cost increases for regular power customers.

The Federal Energy Regulatory Commission (FERC) is currently reviewing the interconnection agreement for the data centre and plans to hold a technical conference on co-located data centres this autumn. Despite the ongoing regulatory review, Talen’s CEO remains optimistic about receiving approval for the amended agreement.