W.012Talen guides 2027 EBITDA up 26%, with no new data center deal in it
Talen Energy’s first 2027 guidance puts adjusted EBITDA at $2.5–2.85B, about 26% above 2026 at the midpoints. Its slides build the midpoint from $2.26B of energy margin and $1.25B of PJM capacity revenue, less operating costs, after $510M of hedge settlements. Talen says its outlook through 2029 assumes no additional large-load deals.
How the slides get to $2.68B
$M, 2027 estimates from Talen’s third-quarter presentation. Energy revenue, hedges and fuel give energy margin; capacity revenue less operating costs gives adjusted EBITDA. The pieces sum to $2,675M, the midpoint of the $2.5–2.85B guidance. Talen published no bridge from 2026.
Data
| Planning year | Talen MW | PJM price, $/MW-day | Capacity revenue |
|---|---|---|---|
| 2026/27 | 10,357 | 329.17 | $1,244M |
| 2027/28 | 10,437 | 333.44 | $1,274M |
| 2028/29 | 10,001 | 325.00 | $1,186M |
PJM planning years run June to May; the calendar 2027 figure in the chart, $1,250M, blends 2026/27 and 2027/28.
Where the growth comes from
Talen attributes the rise to PJM fundamentals and a full year of its acquisitions. Chief executive Mac McFarland said the guidance reflects “strong PJM fundamentals” and a full year from recently acquired plants. Talen bought the Freedom and Guernsey gas plants, which closed in November 2025, and, for $3.45B, Cornerstone’s three Ohio and Indiana plants, which closed on June 15, 2026. Together they added 5,364MW to a fleet of 10,088MW. Cornerstone was priced at about 6.6 times its own 2027 estimated EBITDA, which implies about $523M; it is in 2026 results only from mid-June.
Capacity revenue is the most settled part. PJM’s auctions for 2026/27 and 2027/28 cleared at $329.17 and $333.44 per MW-day, at or near the cap, so Talen’s $1.25B of 2027 capacity revenue is priced; it is 47% of the EBITDA midpoint. Talen sold about $1.5B of its future capacity cash flows for 2027/28 and 2028/29 in October for $1.3B net, a 13% discount, which with cash on hand funded a $1.5B accelerated share buyback.
Energy margin depends on prices Talen has partly locked in. About 70% of expected 2027 generation is hedged, and the slides show expected hedge settlements of $510M, the hedges’ value against market at forward prices as of September 30.
Free cash flow guides up a little faster than EBITDA
Guidance ranges, $M. Solid to the low end, outlined to the high end; the label is the midpoint. 2026 is reaffirmed, 2027 is new.
At the midpoints, adjusted EBITDA rises $550M and adjusted free cash flow $350M. Interest expense in the guidance reconciliation rises from about $470M to about $600M, after the debt Talen took on for the acquisitions.
A third of the fleet came from two deals
MW by plant (Talen’s owned share), from its presentation, colored by when Talen acquired it. Susquehanna is nuclear and 90% owned; Conemaugh and Colstrip are minority stakes; Brandon Shores and Wagner run under reliability-must-run contracts.
What is not in the number
New data center contracts are left out. Talen said on the call that its outlook through 2029 assumes no additional large-load transactions, and its chief financial officer called new deals illustrative and not included in the base outlook. Its existing one is the Amazon agreement for up to 1,920MW from Susquehanna through 2042, about $18B over its life; on the call, Talen said the minimum commitment reaches 840MW in 2029, and that its 2029 outlook does not assume Amazon speeds up the ramp. The slides estimate that a new 1GW data center contract, on economics like the Amazon deal at full ramp, would add $3–5 a share to adjusted free cash flow.
The quarter showed the acquisitions. Third-quarter adjusted EBITDA was $669M, +84% on a year earlier, on 23.9 TWh of generation against 11.1. GAAP net income fell to $138M, after unrealized losses on derivatives and higher interest from acquisition financing.
The election hit the sector the next morning. After Democrats won both chambers of Congress, GE Vernova fell about 10%, Vistra about 12% and Constellation about 7% in morning trading on November 4, according to TIKR, which quoted Evercore ISI on more negative sentiment for AI infrastructure names. TIKR did not report a move in Talen.
What this changes on 06.ai
- Series lead: independent power producers’ guidance split into contracted data center revenue, capacity revenue at cleared prices, and merchant energy margin. Talen’s 2027 midpoint gives all three: about 47% capacity, the Amazon contract ramping, the rest energy margin after hedges.
- Pack lead (Texas data center risk): the post-election moves in power stocks on November 4 are a first market reading on the federal side of the pack’s question; closing prices are worth adding when the pack is next updated.
Sources and method
| Item | Figure | Source |
|---|---|---|
| Q3 results and guidance | Q3 adjusted EBITDA $669M (Q3 2025 $363M); adjusted FCF $433M ($223M); revenue $1,327M ($812M); capacity revenue $323M ($166M); net income $138M ($207M); 23.9 TWh (11.1); capacity factor 75.4% (56.6%); 2026 adjusted EBITDA $2,050–2,200M and FCF $1,225–1,325M reaffirmed; 2027 $2,500–2,850M and $1,500–1,750M; long-term debt $9,540M; about 70% of 2027 generation hedged; ~$1.5B of future PJM capacity cash flows sold for $1.3B net; $3.0B buyback program | Talen, Nov 3 |
| Slides | 2027E energy margin $2,255M (PJM 78.9 TWh at $56/MWh, other $80M, hedges −$510M, fuel and purchases −$1,760M); capacity revenue $1,250M; O&M $725M; G&A and other $105M; guidance reconciliation including interest; fleet by plant, 15,452MW; net debt $9,469M at Oct 30; capacity MW and prices by planning year | Talen Q3 2026 presentation, Nov 3 |
| Call | Outlook through 2029 assumes no additional large-load transactions; new deals not included in the base outlook (CFO); Amazon minimum commitments reach 840MW in 2029; focus on front-of-the-meter deals | Motley Fool transcript, Nov 3 |
| Cornerstone | $3.45B, about $2.55B cash and about $900M of stock; about 6.6 times 2027E adjusted EBITDA | Talen, via Bridgepoint/ECP, Jan 15 |
| Cornerstone | Closed June 15, 2026 | Talen 8-K, Jun 15 |
| Amazon PPA | 1,920MW from Susquehanna through 2042, about $18B | Utility Dive, Jun 2025 |
| PJM 2027/28 | Cleared at $333.44/MW-day, the cap | PJM, Dec 17, 2025 |
| PJM 2026/27 | $329.17/MW-day | Talen, Jul 22, 2025 |
| Power stocks, Nov 4 | GE Vernova −10%, Vistra −12%, Constellation −7% after Democrats won both chambers; Evercore ISI on more negative sentiment for AI infrastructure names | TIKR, Nov 4 |
Growth compares midpoints: EBITDA ($2,500M + $2,850M) ÷ 2 = $2,675M against ($2,050M + $2,200M) ÷ 2 = $2,125M, +25.9%; free cash flow $1,625M against $1,275M, +27.5%. Talen states about 26% and 27%. The build: $4,445M + $80M − $510M − $1,760M = $2,255M energy margin; $2,255M + $1,250M − $725M − $105M = $2,675M. Capacity share is $1,250M ÷ $2,675M = 46.7%.
Leverage is net debt at October 30, $9,469M, ÷ $2,125M = 4.46×; on the 2027 midpoint it is 3.54×. It excludes the $1.5B of sold capacity cash flows, which Talen reports as an other obligation. Discount: 1 − $1.3B ÷ $1.5B = 13.3%; the $1.3B is net of fees. Cornerstone’s implied EBITDA is $3.45B ÷ 6.6 = $523M, derived from the multiple Talen gave at announcement; Talen has not published a Cornerstone EBITDA figure. Fleet: 10,088MW + 2,807MW + 2,557MW = 15,452MW; the Cornerstone MW differ slightly between the announcement, the 8-K and the slides, and the slides’ figures are used. Interest is the midpoint of each year’s range in the guidance reconciliation.
Wire reports are written within hours of the news, on a six-hour schedule. Each lists its sources and shows the arithmetic behind its figures. Not investment advice.