Goldman Sachs Maintains Bullish Stance on PJM Power IPP Sector, Top Picks: TLN, NRG, VST
nashnova research
FERC partially rejected PJM's curtailment proposal, which Goldman sees as a net positive for capacity auction pricing. The bank stays overweight on independent power producers, with Talen Energy, NRG, and Vistra as top picks.
What did FERC approve — and what did it block?
On October 9, the Federal Energy Regulatory Commission ruled on PJM's IRAS proposal — Interim Reliability Adequacy Service, a framework to secure power supply for large users such as data centers. Two items approved, four rejected.
The two approvals are definitional: "large load" now means end users with peak demand ≥ 50 MW, and a registry requires load-serving entities to report technical, operational, and location data. Both take effect October 12, 2026.
The four rejections are what the market cares about: curtailment mechanisms for new data centers, mandatory capacity matching, "bring your own new capacity" certification (BYONC), and excluding new large loads from the VRR demand curve — the variable resource requirement model that sets capacity auction prices.
Why is a rejection actually bullish?
In an October 11 note, Goldman argues that rejecting the "exclude large loads" provision is a medium-to-long-term positive for the sector. This means → PJM must model all forecast demand in the 2029/2030 capacity auction scheduled for December 2026. Data-center load cannot be subtracted from the curve.
In plain terms = a fuller demand curve pushes auction clearing prices higher, which supports generators' capacity revenue. Goldman expects prices to clear at or near the cap.
Goldman also notes that Constellation Energy's recent power purchase agreements (PPAs — long-term contracts between a generator and a buyer) prove that PPAs can get done without IRAS. Bilateral hybrid PPAs have become the most commercially viable path for data centers to lock in supply.
Is valuation still attractive?
Goldman's covered IPP names (excluding Constellation Energy) trade at roughly 8× EV/EBITDA — enterprise value to earnings before interest, taxes, depreciation, and amortization, a standard measure of how expensive a company is — with an estimated 2027 free-cash-flow yield of about 10%.
This means → relative to the tailwinds from rising power prices and favorable auction expectations, current multiples still leave room to move higher.
This reflects the regulatory uncertainty discount the market had priced in. With the FERC ruling now settled, that discount can begin to narrow.
Which names does Goldman prefer — and at what price?
Talen Energy (TLN): Buy, target $509, based on 9.5× EV/EBITDA and 7.5% FCF yield. Goldman sees TLN as the most direct beneficiary of PJM power-price upside.
Vistra (VST): Buy, target $206, based on 10.0× EV/EBITDA and 7.0% FCF yield. Downside risks include capacity auction uncertainty and weaker-than-expected power prices.
NRG Energy (NRG): Buy, target $169, based on 8.75× EV/EBITDA and 8.75% FCF yield. Downside risks include sentiment swings tied to the AI / data-center narrative.
What comes next?
Goldman's bottom line: regulatory uncertainty remains, but it is no longer the key variable capping valuations.
Three supports are converging: PPAs continuing to land, firming power prices, and a favorable setup for the December capacity auction. This means → the sector's core thesis has shifted from "waiting on policy" to "watching earnings."
The near-term catalyst is Q3 earnings — whether results deliver a positive update will set the next leg of market sentiment.
市场有风险，内容仅供研究参考，不构成投资建议。