TLDR
- President Trump and PJM state governors plan to announce a special electricity auction requiring tech companies to fund new power plants through 15-year contracts
- GE Vernova shares jumped 5.7% while Constellation Energy dropped 8.5% on the news
- The auction could create 5-7.5 gigawatts of new capacity worth approximately $15 billion
- Tech companies like Microsoft, Amazon, and Google would pay for grid expansion to power AI data centers
- The plan includes two-year price caps on future PJM auctions to protect consumer electricity bills
GE Vernova shares climbed 5.7% in early trading Friday after news broke about a presidential plan to boost power plant construction. President Trump and governors from PJM Interconnection states are preparing to announce a special electricity auction.
The auction would require tech companies to fund new power plants through 15-year contracts. This approach aims to address growing electricity demands from AI data centers without passing costs to consumers.
The PJM grid covers 13 states and Washington, D.C., serving around 65 million customers. The special auction could generate approximately $15 billion in new power generation capacity.
Tech giants like Microsoft, Amazon, Alphabet, and Google would bear the costs of grid expansion under this plan. These companies need massive amounts of electricity to run their AI data centers.
Trump teased the announcement earlier this week on Truth Social, saying he was working with tech companies to solve power problems. Bloomberg and the Wall Street Journal reported additional details late Thursday.
The plan could be signed Friday at the White House. Governors expected to attend include Democrats Josh Shapiro of Pennsylvania and Wes Moore of Maryland, plus Republicans Mike DeWine of Ohio and Glenn Youngkin of Virginia.
Equipment Makers Stand to Gain
Jefferies analyst Julien Dumoulin-Smith called GE Vernova the “clearest winner” from this development. The company is one of two dominant makers of natural gas turbines in the U.S.
Siemens Energy, the other major turbine manufacturer, also saw gains with shares rising 6.3%. Natural gas turbines represent the largest source of U.S. power generation.
The auction could create 5-7.5 gigawatts of new capacity at $2,000-3,000 per kilowatt, according to Jefferies. New plant construction would drive demand for turbines and related equipment.
Jefferies also identified NRG Energy, PPL Corp, NextEra Energy, Primoris, Quanta, and Williams as potential beneficiaries. These companies provide various services and infrastructure needed for power generation.
Existing Power Companies Face Pressure
Constellation Energy shares fell 8.5%, heading for their largest drop since April. Vistra dropped 3.7% in premarket trading.
Both companies own large existing power generation assets in the PJM grid area. They’ve benefited from rising electricity demand and tight supply conditions.
These power plant owners have struck deals directly with tech companies to supply data center power. Their generating assets have been scarce, which boosted pricing power and profits.
Trump’s auction raises the risk that power will become less scarce. More supply could pressure electricity prices lower.
Jefferies noted that Talen Energy and Capital Power could also face challenges. Market intervention increasingly disfavors contracting with existing facilities.
The plan includes two-year price caps on future PJM auctions. PJM has been paying record amounts to secure electricity capacity, which filters into consumer bills.
PJM spokesperson Jeffrey Shields said the grid operator was not invited to the White House event and would not be attending. The technology choice between peakers and combined cycles would have different implications for energy and capacity prices.
