Some of the investors who drove NRG Energy Inc., Vistra Corp. and others to historic highs on optimism over surging data-center demand are starting to lose patience with the independent power producers.
That’s because deals to supply the massive facilities with electricity are moving too slowly or are simply too small to yield satisfying returns.
Take NRG, which reported its first premium contract with a data-center developer only for shares to make the biggest intraday retreat in more than 2 1/2 years due to the disappointing size: a mere 295 megawatts that won’t ramp up until about 2030.
Get the Latest US Focused Energy News Delivered to You! It’s FREE:
Vistra, Constellation Energy Corp. and Talen Energy Corp. also ended the week lower after shareholders were underwhelmed during earnings calls that failed to furnish fresh deals.
“It’s time for power producers to show investors the money,” said Morningstar analyst Travis Miller, who has a sell rating on NRG and Vistra. “If we saw the contracts above a gigawatt and with decent margins, that could have a material impact on my outlook.”
After a year of hype around artificial intelligence’s ferocious thirst for electricity, stockholders are focusing on execution.
While last week’s retreats were a minor rebuff to the companies’ eye-popping gains of the past year, investors are demanding proof of material earnings growth, Bloomberg Intelligence analyst Gabriela Privetera said.
Meanwhile, independent power producers, operating in a sector littered with bankruptcies, are proceeding cautiously to ensure any agreements make long-term financial sense amid volatile prices.
NRG, Vistra, Constellation and Talen have all announced deals to acquire existing plants this year to chase data-center contracts.
But the longer it takes for those pacts to materialize, the bigger they’ll have to be to meet investors’ expectations.
–Naureen S. Malik, Bloomberg News
Share This:
More News Articles
