Incentive brief · Pennsylvania

Pennsylvania — what’s on the ground.

The home of Homer City, the Talen-AWS Susquehanna deal, and some of the largest coal retirement opportunities in the country. Pennsylvania sits at the center of the PJM capacity market debate — and the political stakes are real.

Homer City campus: $10B coal-to-DC
2025 PJM capacity auction: $16.4B total
KIZ Program: Keystone Innovation Zone tax credits

The context

PJM territory — PPL, PECO, Duquesne, West Penn Power

Pennsylvania is ground zero for the PJM capacity market fight. The 2025 PJM capacity auction cleared at $16.4 billion — Pennsylvania Governor Josh Shapiro called it 'the largest unjust wealth transfer in the history of US energy markets.' The Talen-AWS Susquehanna restructure (18 months, $18 billion retail PPA) set the precedent for every subsequent BTM deal. And Homer City is the archetype for coal-to-DC conversion. Pennsylvania is where PJM policy meets real infrastructure.

Homer City campus: $10B coal-to-DC
2025 PJM capacity auction: $16.4B total
KIZ Program: Keystone Innovation Zone tax credits
Pennsylvania First Program: Grant/loan (discretionary)

Live pressure

What’s actively moving in Pennsylvania.

FERC 12/2025 co-location order transition — most affected state
PA PUC proceedings on Homer City successor generation and interconnection
Governor Shapiro's public pressure on PJM capacity market reform
Senate and House proposals on large-load taxation and community benefit structures

Programs

The incentives we ship against.

Every active Pennsylvania program that affects data center economics. Thresholds, benefits, clawback exposure, and the practical notes our analysts rely on.

Keystone Innovation Zone (KIZ) Tax Credit

Income tax credit

Threshold: KIZ-designated zone, qualifying technology company
Benefit: Up to $100,000 per year in Pennsylvania tax credit
Clawback exposure: Per KIZ agreement
Cliffcenter notes: Limited per-project but easy to stack with other programs. KIZ zones are scattered across the state and include several Pittsburgh and Philadelphia industrial areas.

Pennsylvania First Program

Grant / loan / loan guarantee

Threshold: Project-specific evaluation by PA DCED
Benefit: Flexible funding (grants, low-interest loans, loan guarantees) for qualifying economic development projects
Clawback exposure: Per DCED agreement
Cliffcenter notes: Discretionary program with significant flexibility. DCED moves fast on deals with strategic value. Most major DC projects in PA have touched this program.

Local Economic Revitalization Tax Assistance (LERTA)

Local property tax abatement

Threshold: LERTA district designation, local approval
Benefit: Up to 10-year abatement of property tax increases on improvements
Clawback exposure: Per LERTA agreement
Cliffcenter notes: LERTA is Pennsylvania's most common local property tax tool for industrial projects. We maintain a current list of active LERTA zones and local municipal contacts.

Pennsylvania Economic Development Financing Authority (PEDFA)

Tax-exempt bond financing

Threshold: Qualifying industrial development project
Benefit: Access to tax-exempt financing with reduced interest rates
Clawback exposure: Per bond structure
Cliffcenter notes: PEDFA tax-exempt bonds can reduce financing costs by 100–300 basis points. Worth evaluating for large capex projects.

Playbook

How we run a filing in this state.

Map the LERTA district

Most Pennsylvania DC candidates sit in or adjacent to LERTA districts. We map the current districts, identify the qualifying projects, and structure the local negotiation.

Engage DCED early

DCED has significant discretion on the Pennsylvania First Program and responds well to projects with strategic regional value. Early engagement opens options that get closed off in later phases.

Model Homer City influence

The Homer City conversion reshaped expectations for coal-to-DC deals in Pennsylvania. Our playbook includes lessons learned and regulatory pathway analysis from the Homer City structure.

Track the PJM capacity market fight

Governor Shapiro's public pressure on PJM could translate into rate interventions that affect project economics. We track the PA PUC and PJM proceedings together.

Authority and limits

Where the authority lives — and where it doesn’t.

Pennsylvania's incentive authority runs through the Department of Community and Economic Development (DCED), PEDFA for financing, the PA PUC for utility-related matters, and local municipalities for LERTA and other property tax programs. PJM oversight of grid economics affects every project.

Warnings

Two risks we surface at kickoff.

PJM capacity cost exposure

PJM's 2025 capacity auction cleared at record prices. Projects coming online in 2027 or 2028 face materially different capacity cost assumptions than those in the pipeline from 2024.

Political visibility

Pennsylvania's data center buildout is politically visible. Expect local intervener activity, environmental review scrutiny, and public hearings at a higher frequency than in lower-profile states.

Other states

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VirginiaNorthern Virginia, Loudoun, Prince William, Henrico TexasERCOT, Oncor, CenterPoint, AEP Texas GeorgiaGeorgia Power, Southern Company territory ArizonaSRP, APS, TEP territory OhioAEP Ohio, FirstEnergy, Duke Ohio territory TennesseeTVA territory — Memphis, Nashville, Chattanooga, Knoxville IowaMidAmerican, Alliant, ITC Midwest — MISO territory CaliforniaCAISO territory — PG&E, SCE, SDG&E, LADWP, municipal systems WashingtonBPA territory — Puget Sound Energy, Avista, Seattle City Light

Pennsylvania brief

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