News Digest: AI Demand to Power M&As in The Power Sector
March 16, 2025
News Digest:
The U.S. power sector is experiencing a surge in mergers and acquisitions (M&A) driven by record electricity demand, particularly from data centers supporting artificial intelligence. This trend is defying broader market uncertainty and a slowdown in overall M&A activity, with private equity firms and institutional investors eagerly seeking opportunities in power generation and infrastructure.
In the first two months of 2025, 27 U.S. power deals worth $36.4 billion were announced, surpassing nearly every comparable period in the last two decades. The highlight was Constellation Energy’s $16.4 billion acquisition of Calpine. This flurry of deals stands in contrast to the overall M&A market, which is experiencing its weakest start since the global financial crisis due to economic volatility and uncertainty surrounding Trump administration policies.
President Trump has declared an energy emergency, emphasizing the urgent need to expand power infrastructure for economic and national security. Investors see significant opportunities across the sector, with firms like KKR and PSP Investments acquiring a 20% stake in American Electric Power’s transmission network for $2.8 billion. Rising power company valuations have also fueled deal-making, enabling firms to execute larger transactions with less dilution. Companies like Vistra, Constellation, and NRG Energy have seen their stock prices surge between 82% and 220% since early 2024. The positive investor response to Constellation’s Calpine acquisition—reflected in a 25% stock rally—suggests strong confidence in the sector’s growth. As AI-driven energy demand continues rising, the U.S. power sector remains a hotbed for M&A activity.
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