Groundbreaking Remarks

Alex Hernandez | Chief Executive Officer, Cumulus Data & Talen Energy

Cumulus Data Center Campus Groundbreaking Ceremony
Alex Hernandez | Chief Executive Officer, Cumulus Data & Talen Energy
September 30, 2021

Thank you Brad. Thanks to our special guests for taking the time to join us. Today’s groundbreaking event has been nearly two years in the making. We are grateful for the support and efforts of our board, our strategic partners and our project team.

I would also like to recognize the leadership exhibited by the Pennsylvania legislature, the Governor, our local township, and many others who have played a key role in anchoring the state of Pennsylvania to the key forces driving technology and infrastructure investment across the globe. This political leadership will result in approximately 1,000 jobs at the height of the construction of each building on this campus and will be the foundation of a brighter future for this plant, for Talen, and for the Commonwealth of Pennsylvania.

Many have wondered if the idea of a small, Pennsylvania based power company leading the clean energy and digital infrastructure transition was too ambitious. Today’s groundbreaking of our Cumulus data center campus marks the first tangible step in executing this vision.

On this special occasion, I’d like to share a bit more about why Talen is transforming to a clean energy and digital infrastructure platform and how we plan to reach our goal.

Let me begin with a short story about street names.

Pearl Street Station was the first commercial central power plant in the United States. It was located at 255 Pearl Street in the Financial District in New York City on a small site measuring 50 by 100 feet. The station was built by the Edison Illuminating Company, under the supervision of Thomas Edison. Pearl Street Station was fired by coal; and it started generating electricity on September 4, 1882, serving an initial load of 400 lamps at 82 customers.

Who could have imagined at the turn of the 19th century that the era of gaslights would soon end, and be replaced by a world powered by plentiful, low-cost electricity?  Who could have imagined this low-cost, carbon-free electricity powered by nuclear fission on a parcel of high bedrock on the Susquehanna river? Did anyone anticipate this carbon-free nuclear energy would be supplemented with solar power plants harnessing energy from the sun?  And who would have predicted who would win the race between the use of alternating current versus direct current to transport electricity across the United States, beginning with 255 Pearl Street?

Today we begin our journey with a humble vision on our own street on this campus, which we will call Cumulus Boulevard. Cumulus Boulevard will be the principal point of entry to our digital campus and will connect at the T-intersection to my left to Electron Avenue where we are standing now. This marks both the physical and figurative intersection of the worlds of cloud computing, infrastructure, and clean electricity.

Just as Thomas Edison imagined a world of plentiful power without gaslights, we at Talen imagine a world where the carbon-free nuclear power of Susquehanna will be transformed to computing power. These clean electrons, when converted to bits of information, will be exported from Salem township via fiber optic networks across the United States and the world.

Approximately 100 years after Edison established the Pearl Street Station, Amazon constructed its first stand-alone data center at 4101 Westfax Drive, in Chantilly Virginia on what was then a parcel of rural land. Who could have imagined the growth of nearby Ashburn and the country’s largest data center market emerging from those farm fields in Virginia? Today at Talen and Cumulus, we imagine a world where the next Amazon, Google, Microsoft, or Nvidia data center will be located at Cumulus Boulevard, in Salem Township, in Pennsylvania.

Technology Innovation and the Power “Trilemma”

So why is a legacy power company focused on digital infrastructure? Because the world around us is swiftly changing and innovating, particularly in the areas of convergence between technology, infrastructure, and carbon-free energy.

All of this digital infrastructure growth around the globe ultimately relies on electricity. Power is at the core of global computing, semiconductor design, data center operations, cloud computing adoption, and digital currency mining.

As we have experienced over the last year through COVID, the electrification of the world is accelerating due to technology adoption in nearly every aspect of human life and economic activity. This in turn is accelerating the demand for digital infrastructure assets such as hyperscale cloud data centers that rely on the very power we produce.

Importantly, this digital infrastructure demand is also converging with global ESG mandates and consumer preferences for zero-carbon, low-cost, and reliable electricity.  We call this the “trilemma.”

Digital infrastructure providers across all segments of global computing face this “trilemma.” Their digital realty assets are the infrastructure that power our daily existence: from Netflix streaming, to family photos and video storage on our iPhones, to our kids’ gaming applications, to artificial intelligence, data lakes, or even Bitcoin and Ethereum mining.

We intend to meet this technology consumer demand, at scale, through our new Cumulus Growth platform. This places Talen, Cumulus, and Pennsylvania squarely in the middle of this attractive macro that is growing exponentially across the United States and the world.

Digital Infrastructure & Power Convergence

And so how will we get there you may ask?  We are executing the Cumulus digital strategy by developing and constructing data centers, digital currency mining and blockchain infrastructure across our footprint, beginning here at Susquehanna.

The flagship campus you see being constructed behind me will accommodate up to 475 Megawatts of hyperscale data centers, and approximately 300 Megawatts of digital currency mining facilities. Building One will cost approximately $350 million, and we anticipate the campus to create investment opportunities exceeding $1 billion as we execute our plan.

As we embark on this investment, I would like to recognize the efforts of Senator Gordner, Representatives Oberlander and Toohil, Governor Wolf, and other members of the Pennsylvania legislature.

The Commonwealth passed legislation which exempts data center infrastructure from state sales and use tax, helping to put Pennsylvania on a level playing field with other states like Virginia, which has a significant data center presence and favorable tax treatment.

As we work to attract data center clients, this incentive will be a key factor for future customers of this campus. The combination of our carbon-free, reliable energy and the economic and tax benefits allows us to deliver a compelling value proposition to prospective tenants.

The Cumulus data center investment will create family-sustaining jobs, technology training, and other economic benefits including tax revenue and increased consumption of local goods and services. The first two Cumulus data centers, one for hyperscale cloud and another for coin applications, are expected to be completed by the second half of 2022. My colleague Dustin Wertheimer, CFO of Cumulus Data, will share more details of where we are in the execution and construction of this campus.

Why Choose This Transformation As Our Goal?

In closing, at our ESG Equity Investor Day last spring, I compared our strategy for transforming Talen with President Kennedy’s 1962 challenge to Americans to win the space race.  And today we discussed the significance of Edison’s Pearl Street Station in the race of electrify the U.S.

When President Kennedy delivered his remarks in Houston, Texas, or Edison his at the turn of the century, the world was rapidly changing and was at an inflection point of technology development.

Today, change continues to accelerate across the globe, and we find ourselves at yet another inflection point of technology growth. As the world continues to innovate, it is imperative for businesses such as ours transform, or risk being left behind.

We have conviction that the worlds of technology, power, ESG and infrastructure are converging and colliding at a rate that many across the world will soon understand.

In the midst of this rapid change, Talen’s Cumulus Growth platform is well positioned to innovate, to compete, and to create significant value.

Many believed in 1962 that the U.S. was behind in the race to space, and in 1882 that the electrification of the U.S. was not possible. And critics believed in both cases that the country did not have the capability to execute this vision. They were ultimately proven wrong. I have learned through my own experiences to not underestimate the pace of global change. And more importantly, I have learned to not underestimate the ingenuity of a team driven by purpose. I am proud all the women and men of Talen who have contributed to this purpose, and who will soon surprise the world.

We thank you for your partnership and support as we set sail and look forward to our ribbon cutting next year. I will now turn it over to my colleague Dustin Wertheimer, CFO of Cumulus Data, to provide an update on the construction of our data center campus.

Cautionary Statement Regarding Forward-Looking Information
These remarks include “forward-looking statements.” All statements, other than statements of historical fact, included in this press release that address activities, events or developments that Talen expects, believes or anticipates will or may occur in the future, as well as aspirational goals, are forward-looking statements. These statements are based on certain assumptions made by Talen based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement. Talen undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after the issuance of this press release, except as required by law. This press release and the materials referred to herein are not an offer to sell or purchase, or a solicitation of an offer to sell or purchase, any securities.