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The Winter Olympics are a reminder that in elite competition, small errors compound quickly. The same applies to IPP investing. Strong sector performance over the past year, driven by M&A and hyperscaler offtake momentum, has given way to pressure from PJM load forecast revisions and rising behind-the-meter data center development. The pullback has created differentiated opportunities across names.
TLN bolted on 2.6 GW of gas capacity from Energy Capital Partners for $3.45 billion. We value the acquired portfolio at $4.64 billion, putting NAV at $366/share, a 6% discount to yesterday’s close. But the acquisition is highly concentrated: 96% of the value sits in just two plants (Waterford and Lawrenceburg), so any further upside depends on whether those assets can contract at attractive prices. Susquehanna anchors the story, but durability depends on PJM capacity prices staying elevated and 2 GW of disclosed PPAs actually closing.
NRG is the hardest to underwrite at today’s price, and the Kiewit-GEV venture is its chipping medal: impressive on paper, but fragile under stress. At $125/share NAV versus ~$173 market, a roughly 28% discount, the venture (5.4 GW of new CCGTs by 2032) needs to land perfectly. Our base case assumes $1.4 million/MW capital costs, competitive against the $2.0+ million/MW others are quoting, but untested at scale. At $1.76 million/MW, NAV drops nearly $8/share. Justifying today’s stock also requires LMP expansion and capacity prices at the cap.
VST is our Klæbo: dominant, efficient, and built for endurance. At $220/share NAV versus ~$174 market, it trades at a 20% discount. The META nuclear PPAs lock in 2.2 GW at ~$85/MWh, and 2026 to 2030 average EBITDA of $7.8 billion at 9.5x implies ~$74 billion EV. Less net debt and other claims gets you to our $220/share equity value. While peers grind the incline, VST’s contracted nuclear floor lets it sprint.
CEG is the franchise built to last. We value equity at $295/share, 2% below Tuesday’s close, but the base case understates the opportunity. With approximately 15 GW of uncontracted nuclear capacity, if the remaining fleet signs PPAs at $90/MWh, NAV rises 68% to ~$495/share. Hyperscaler demand for clean baseload is accelerating, the probability of additional contracts is rising (see VST’s recent META deals locking up remaining nuclear capacity), and the quality plus asymmetry of the position makes CEG a compelling hold even at current levels.
We favor VST and CEG. Nuclear optionality is real, contracting momentum is building, and these are franchise assets moving into an increasingly scarcity-priced environment.
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