Core Viewpoint - PPL Corporation and Blackstone Infrastructure have formed a joint venture to develop gas-fired, combined-cycle generation stations to meet the power needs of data centers in Pennsylvania through long-term energy supply agreements [1][2][4]. Group 1: Joint Venture Details - The joint venture aims to build new dispatchable generation to support the growing demand from data centers, leveraging the expertise of both companies [2][4]. - PPL holds a 51% interest in the joint venture, while Blackstone Infrastructure owns 49%, with expenses and distributions shared ratably [5]. - The joint venture plans to engage with landowners, natural gas pipeline companies, and turbine manufacturers to facilitate the construction of new generation plants [4][9]. Group 2: Market Demand and Capacity Concerns - PJM Interconnection has forecasted potential capacity shortages as early as the 2026-27 delivery year due to increasing demand from data centers and the retirement of aging generation resources [7]. - Within PPL Electric Utilities' service territory, there is over 60 gigawatts (GW) of potential data center projects, with 13 GW in advanced planning stages, indicating a projected 6 GW generation shortfall in the next five to six years [8]. - PPL estimates that meeting this shortfall will require approximately $15 billion in investments, assuming the use of natural gas combined-cycle units [8]. Group 3: Economic and Legislative Context - Pennsylvania Governor Josh Shapiro emphasized the importance of diversifying energy sources and welcomed the investment from Blackstone Infrastructure to support long-term clean energy solutions [6]. - The joint venture's success is contingent upon executing long-term energy services agreements with hyperscalers, which have not yet been signed [4][9]. - Current legislation in Pennsylvania aims to allow utilities to invest in and operate generation, which is crucial for addressing resource adequacy concerns [9].

Investment Rating - Caterpillar Inc. (CAT) and Cummins Inc. (CMI) are both rated as "Buy" with price targets of $418 and $431 respectively [6][7][14]. Core Insights - The report indicates a positive outlook on the sustainability of data center demand, projecting that CAT and CMI will deliver approximately 6-7 GW of backup generator supply this year, against an incremental data center computing capacity of around 13 GW [3]. - CAT is expected to benefit from turbine prime power sales, with CAT Titan 130 turbines specified in regulatory filings for various projects, potentially generating revenue of approximately $250-300 million based on 15 turbines [3]. - CMI is investing $150 million to expand its machining capacity, while CAT is investing over $700 million to upgrade its facilities, indicating high ROI potential for both companies [3]. Summary by Sections Data Center Demand and Supply - CAT and CMI are projected to supply around 6-7 GW of backup power, with data centers historically seeking to back up over 100% of their power needs [3]. - The estimated backup power requirements for 2025 range from 6.6 GW (50% coverage) to 15 GW (115% coverage) based on 13 GW of net data center additions [3]. Company Investments - CMI's investment of $150 million focuses on expanding machining capacity, while CAT's investment of over $700 million includes productivity improvements and facility upgrades [3]. - The report highlights CAT's emerging opportunity in turbine sales, with specific projects already incorporating CAT turbines [3]. Revenue Projections - The revenue from CAT turbines specified in regulatory filings is estimated to be around $250-300 million based on the number of turbines involved in various projects [3].