(Reuters) - Energy company PPL Corp (NYSE:PPL) reported better-than-expected first-quarter earnings on Wednesday, benefiting from higher transmission revenue and lower operating costs, as the company moved to expand its customer base with several gigawatts of new data center capacity.
PPL benefited from higher sales volumes, increased transmission and distribution revenue and lower operating costs, said executives with the electric utility and natural gas company, which has service areas including Kentucky, Pennsylvania and Rhode Island.
PPL recently signed deals to add more than three gigawatts of data center capacity in Pennsylvania, with each of the centers requiring between $50 million and $150 million in capital investments from PPL signed agreements, CEO Vincent Sorgi said on a call with investors.
The Pennsylvania projects, which can range in more than one gigawatt of capacity in size, would likely have in-service dates in 2026, Sorgi said. The company said it is also pursuing smaller data center customers, from around 300 to 500 megawatts each, in Kentucky that would require less investment from the utility.
"We have capacity on our grid such that the needed investment by the data centers is not too significant," Sorgi said, adding that the reliability and abundance of reasonably priced land in Pennsylvania and Kentucky also drew interest from data centers, which support technology like generative AI and cloud computing and have been a driving force behind a U.S. electricity demand resurgence.
PPL said has also nearly completed $3.1 billion in infrastructure improvements this year to increase grid reliability and resiliency and adding clean energy.
PPL's operating expenses fell 8% to $1.76 billion in the first quarter, while the company posted revenue of $2.30 billion, beating analysts' estimates of $2.06 billion, according to LSEG.
On an adjusted basis, the company earned 54 cents per share, ahead of estimates of 50 cents.