Power and utilities: US Deals 2025 outlook

Political uncertainty stalls deal activity despite widespread investor interest

The power and utilities sector in the last year has seen increased organic capital investment on the heels of the Inflation Reduction Act, but faced uncertainty surrounding the US presidential election affecting deal market activity. In the years ahead, we expect strategic focus and growing electricity needs to fuel significant capital investment and deal activity.

Executives in the sector closely monitored the November election races that had the potential to impact the sector. Most important was the re-election of Donald Trump as US president, which will likely lead to policies favoring traditional energy sources, including a relaxation of environmental regulations and an uptick in investment in fossil fuel infrastructure. Despite the changes in the White House, we expect renewables to continue to be a focal point in the industry for organic capital investment, as we do not anticipate wholesale changes to federal support in the sector in the near-term with upcoming demand growth expectations and historical bipartisan support.

Over the last 12 months (November 2023 to November 2024), the power and utilities industry saw a significant decrease in the number of renewable and clean energy deals, down to 13 in 2024 from 27 in 2023, 28 in 2022 and 29 in 2021.
The anticipation of the US presidential election contributed to a slowdown in renewable energy deals, as market participants braced for potential shifts under a possible new administration.
While substantial organic capital continued to flow into the sector in 2024, inorganic deals activity is expected to slow in the near term, as industry participants await clarity in future federal policy from the Trump administration.
Fossil fuel generation deal activity saw an uptick over the past 12 months. Deals in fossil fuel generation accounted for 19% of total deal value over the last 12 months, more than double the 2023 level of 7%. Deals within this subsector were driven by expectations of continued need for natural gas infrastructure to ensure reliability. We expect the number of fossil generation deals will continue to climb under a Republican-controlled White House and Congress.

^{Note: The primary M&A data source used in the 2025 outlook is S&P Capital IQ.}

Strategic thinking

In the last 12 months, 30 deals were completed in the power and utilities sector — down from 52 in 2023, 36 in 2022 and 56 during the historically active deals market of 2021. Similarly, total deal value totaled $27.8 billion, down from total deal value of $43.3 billion in 2023, $36.3 billion in 2022 and $53.3 billion in 2021. Despite the lower overall number of deals and value, there were several large transactions in the sector, including a $6.3 billion megadeal, which accounted for 22.7% of deal value in the sector in 2024. With a focus on renewables and clean energy, contributions from both strategic and financial investors remained strong. However, political uncertainties are expected to impact deal activity and further slow renewable energy transactions. On the bright side, value propositions in the short-term in the sector remain strong — with many strategic, financial and inbound investors actively interested in deploying capital.

What to watch

The burgeoning demand for data centers, driven by the exponential growth in cloud computing, artificial intelligence and data storage in the industry, is poised to significantly impact the power and utilities sector. Energy-intensive facilities seeking sustainable and reliable power sources are driving the increased demand for renewable energy.

Power and utilities companies are pairing renewables such as solar and wind power with natural gas facilities to meet their substantial electricity requirements. This shift towards greener energy solutions is further catalyzing investments in renewable infrastructure, propelling the industry toward a more sustainable future. Concurrently, the resurgence of previously retired and currently operating nuclear power facilities providing a steady, low-carbon power supply to ensure the continuous and efficient operation of data centers. This dual focus on renewables and nuclear energy underscores a transformative phase in the power and utilities sector as it adapts to the evolving energy needs of modern data centers, while striving to achieve environmental and operational sustainability.

What to do next

A Trump presidency ushers in a regulatory environment that is expected to be supportive of traditional energy sources, presenting both opportunities and challenges for dealmakers in the power and utilities sector. With an expectation for continued rollback of environmental regulations and support for fossil fuels, dealmakers should prepare for increased M&A activity in the broader energy, utilities and resources industry. Investors may find opportunities in revitalizing natural gas infrastructure and other fossil assets.

While the renewable energy sector could face short-term headwinds from uncertainty surrounding future federal incentives, many industry experts expect a more strategic review of provisions of the Inflation Reduction Act as opposed to a wholesale reversal. Strategic due diligence will be crucial as dealmakers navigate a shifting regulatory landscape and potential market volatility. It’s important to stay agile and informed about policy developments, which will be key to optimizing strategies and capitalizing on emerging opportunities under the new Trump administration.

“Widespread interest from strategic, financial and inbound investors remains strong in the industry, with political policy changes remaining top of mind for dealmakers.”

— Kenyon Willhoit, Deals Principal, Power & Utilities, and Infrastructure

The bottom line

The power and utilities sector continues to have widespread interest from strategic, financial and inbound investors. Solid deal volumes continue as industry participants look to the sector for avenues for deploying capital, a continued focus on environmental, social and governance (ESG) initiatives, and to drive value through supportive infrastructure plays. While uncertainties surrounding how upcoming changes to political policies may impact near term dealmaking, broader sector support is expected, which will drive deal activity in the years ahead.

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