PPL Corp. and investment giant Blackstone Infrastructure have formed a joint venture to build, own, and operate natural gas combined-cycle generation plants in Pennsylvania specifically designed to serve data center loads through long-term energy service agreements (ESAs).
The partnership, unveiled at the Pennsylvania Energy and Innovation Summit in Pittsburgh on July 15, represents a strategic response to mounting grid reliability concerns and unprecedented electricity demand growth driven by artificial intelligence and cloud computing expansion.
The companies on Tuesday said the joint venture will focus on developing front-of-the-meter generation facilities positioned above the Marcellus and Utica shale formations to provide rapid connections to existing gas pipeline infrastructure while targeting regions with significant data center development interest. PPL will hold a 51% stake in the joint venture, and Blackstone Infrastructure will own 49%. Both parties aim to share expenses and distributions proportionally. PPL noted the partnership will not involve its regulated subsidiaries, including PPL Electric.
“We’re excited to leverage the powerful expertise that PPL and Blackstone Infrastructure possess to bring much-needed new dispatchable generation online in Pennsylvania to match new data center load in a way that directly supports economic development and large load customer needs, helps to mitigate rising electricity prices for energy consumers, and delivers increased value for shareowners without traditional merchant power risk,” said PPL President and Chief Executive Officer Vincent Sorgi during the announcement hosted by Senator David McCormick at Carnegie Mellon University.
Addressing Critical Resource Adequacy Shortfall
The partnership emerges as PJM Interconnection faces potential capacity shortages as early as the 2026-27 delivery year, driven by explosive data center demand and the retirement of aging dispatchable generation resources.
“Within PPL Electric Utilities’ service territory in Pennsylvania alone, data center interest has reached over 60 GW of potential projects, with over 13 GW in advanced stages of planning,” PPL noted on Tuesday. But if all 13 GW materialize, PPL estimates a 6 GW generation shortfall in its territory within five to six years. That represents about a $15 billion investment need, assuming natural gas combined-cycle units are used to meet this need,” it said.
While that generation could be built by existing independent producers or the new joint venture, PPL notably said it could also be developed by PPL Electric Utilities—“if permitted.” PPL Corp., notably, is today a fully regulated utility holding company with no competitive generation assets. It completed its strategic exit from competitive generation in 2015, when it spun off PPL Energy Supply to form Talen Energy, and has since focused exclusively on transmission and distribution through its regulated utilities in Pennsylvania, Kentucky, and Rhode Island.
On Tuesday, the company suggested the new joint venture with Blackstone offers “a creative solution,” allowing it to stretch beyond its regulated utility model to grasp the opportunity posed by data centers, address regional reliability, without re-entering the merchant generation space.
The company, however, stressed that the joint venture “does not lessen the need for additional action to address underlying resource adequacy concerns.” That will include “passage of current legislation pending before both the Pennsylvania House and Senate to allow the state’s utilities to invest in, own and operate generation again,” it noted. The bills now pending before the Pennsylvania House (HB1272) and Senate (SB312) would mark a decisive policy reversal—allowing regulated utilities to once again build, own, and operate power plants, and to enter long-term contracts with independent developers to ensure capacity additions keep pace with surging demand and reliability needs.“The legislation also encourages utilities to enter into long-term contracts with independent power producers to help derisk their new generation investment,” PPL added on Tuesday. “Meeting this unprecedented demand growth will require an unprecedented response and will require all market participants to be part of the solution.”
During the inaugural Pennsylvania Energy and Innovation Summit, hosted by Senator Dave McCormick (R-Pennsylvania) at Carnegie Mellon University in Pittsburgh, notably, companies announced more than $90 billion of investments in data centers, energy, and power infrastructure, and workforce and artificial intelligence projects in a widesscale effort to address resource adequacy as an urgent, system-wide concern.
A big push has come from Gov. Josh Shapiro, who, frustrated with PJM’s protracted interconnection process, filed a formal complaint late last year that culminated in a settlement in January 2025 reducing PJM’s auction price cap, lowering it from more than $500/MW-day to $325/MW-day.
At the summit, Shapiro called the moment a “once-in-a-generation opportunity” to align energy policy, private investment, and permitting reform, spotlighting his administration’s new Lightning Plan to boost in-state power generation, expedite approvals through the PA Permit Fast Track program, and unlock shovel-ready sites via the $500 million PA SITES initiative. He noted the strategy has already secured $25 billion in private investment—including Amazon’s record-setting $20 billion AI and cloud campus buildout—and said Pennsylvania’s successful push to reduce PJM’s capacity price cap will save consumers an estimated $21 billion over two years.
At the summit, notably, PPL also said it would invest $6.8 billion through 2028 to expand grid capacity and modernize transmission across multiple Pennsylvania counties to support the growing power demand of data centers.
For Blackstone Infrastructure, meanwhile, the joint venture aligns with a broader strategy to fuse its digital infrastructure investments with long-term, contracted generation assets. Since launching in 2017, the firm has amassed $60 billion in infrastructure assets under management and posted a 17% net annual return. Over the past three years, it has significantly expanded its presence in the data center space, including to take QTS Realty Trust private in a $10 billion deal that added 7 million square feet of hyperscale capacity, and forming a $7 billion joint venture with Digital Realty to develop four hyperscale campuses totaling 500 MW across Northern Virginia, Frankfurt, and Paris. In January 2025, Blackstone Energy Transition Partners announced its acquisition of the 774-MW Potomac Energy Center, a modern combined cycle gas plant located in Loudoun County, Virginia—better known as “Data Center Alley”—in a deal estimated at $1 billion.
At the summit in Pennsylvania, Blackstone committed over $25 billion in digital and energy infrastructure investment, intended to catalyze up to $60 billion more. “We are excited to partner with PPL to develop generation projects that will help Pennsylvania, and PJM, meet the growing demand for power driven by the digitization of the economy,” said Sebastien Sherman, Senior Managing Director at Blackstone Infrastructure on Tuesday. “Blackstone Infrastructure has a proven track record and commitment to long-term partnerships, and we look forward to working with PPL to power data centers across Pennsylvania and the broader PJM service territory.”
A ‘Creative Solution’
Under the terms of the joint venture, PPL and Blackstone intend to enter into “long-term energy services agreements with regulated-like risk profiles that do not expose the companies to merchant energy and capacity price volatility.” That approach is designed to secure the output of new gas plants through long-term contracts, likely with hyperscale data center operators—customers with massive, predictable power demands.
By structuring these agreements to deliver stable, predictable revenue streams—reminiscent of cost-of-service regulation—the joint venture can effectively shield itself from the erratic price swings and revenue uncertainties common in merchant power markets. As significantly, PPL emphasized, “Construction of new natural gas plants will require the successful execution of ESAs with hyperscalers.”
So far, the joint venture has already secured multiple land parcels and is actively engaged with landowners, natural gas pipeline companies, and turbine manufacturers, though no energy service agreements with hyperscale data center operators have been finalized to date. “The joint venture team also looks forward to engaging with local stakeholders as plans develop,” the companies said on Tuesday.
PPL and Blackstone’s partnership echoes similar deals in recent months that have produced new business streams for key players. In June, competitive generator Talen Energy signed a 17-year, $18 billion nuclear PPA with Amazon Web Services to deliver up to 1,920 MW from the Susquehanna station via a grid-connected retail model. Constellation is taking a comparable path, committing $1.6 billion to restart Three Mile Island Unit 1 under a 20-year supply pact with Microsoft and inking a separate 1,121 MW nuclear PPA with Meta in Illinois.
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).