Power and utilities

After a period of caution in late 2023, M&A activity in the power and utilities (P&U) sector has rebounded sharply over the last 12 months. From May 2024 to May 2025, total sector deal value reached approximately $77.7 billion — a significant increase over 2023 ($43.3 billion) and 2024 ($29.6 billion) levels. This surge was driven primarily by two landmark fossil fuel transactions: a $29 billion acquisition of a large independent power producer in January 2025 by a major US power generation company, and a $12.5 billion acquisition of a prominent power portfolio announced in May by a leading integrated energy company. These deals underscore how shifting federal energy policy, growing power demand from data centers, and a recalibrated investor appetite are reshaping the sector’s M&A landscape. Since the 2024 presidential election, the P&U industry has entered a new phase — one defined by evolving risk profiles, ongoing energy transition goals and renewed emphasis on dispatchable generation and grid resilience.

Key developments over the past 12 months:

• Deal value spiked — despite fewer transactions: Total deal value over the past 12 months approximated $77.7 billion, a substantial increase compared to 2023 and the last 12 months through November 2024. This growth was led by two megadeals in fossil generation, together accounting for over $41 billion in value.
• Renewables deal count declined, but interest remains: The number of renewable and clean energy deals fell to 14 in the last 12 months, down from 27 in 2023, 28 in 2022 and 29 in 2021. Still, these deals represented about 22% of total deal value, reflecting continued strategic interest amid policy uncertainty.
• Shift toward conventional and dispatchable power: The two fossil generation megadeals highlighted the growing concern around grid reliability and federal signals prioritizing conventional energy to ensure system stability.
• Policy recalibration impacting clean energy: Since President Trump’s re-election in November 2024, the sector has been adjusting to anticipated deregulatory policies and a stronger federal emphasis on fossil fuel development. This has introduced uncertainty around clean energy tax incentives and infrastructure funding tied to the Inflation Reduction Act (IRA) — a central driver of renewable investment in recent years.
• Demand from data centers adds momentum: Investor optimism is also being fueled by long-term demand growth from data centers and broader electrification. This is catalyzing deals not just in generation, but across grid infrastructure and utility-scale solutions designed to meet these emerging needs.
• Cautious optimism amid evolving risks: While uncertainty surrounding the future of the IRA continues to weigh on clean energy transactions, deal activity remains resilient. Strategic buyers and investors are reassessing risk profiles but continue to pursue assets that align with a more diversified, reliable and demand-responsive energy future.

Note: The source used in the 2025 midyear outlook is S&P Global Market Intelligence.

As we look ahead to the second half of 2025, we’ll be closely monitoring how three major dynamics continue to shape the power and utilities M&A landscape: the growing energy demands of data centers, evolving federal energy policy and increased attention on grid reliability and system resilience.

Data centers — propelled by the rapid adoption of AI, cloud services and hyperscale computing — are driving unprecedented load growth, particularly in regions with limited excess capacity. This is accelerating investor focus on both renewable and dispatchable generation assets that can serve digital infrastructure at scale. Concurrently, policy uncertainty under the current administration — especially regarding the future of the IRA — is redirecting capital toward “policy-neutral” assets such as natural gas-fired generation and grid infrastructure.

Dealmakers should prepare for continued volatility by aligning transaction strategies with areas of high demand, policy resilience and operational flexibility. Opportunities will increasingly be found where generation, reliability and digital growth intersect.

What to watch and where to act:

To succeed, dealmakers should adopt a dual-focus strategy — seizing short-term opportunities tied to grid resilience and digital load while continuing to build toward long-term energy transition goals even amid policy uncertainty.

Power and utilities deal activity surged over the past year, highlighted by a $29 billion acquisition of a large independent power producer in January 2025, and rising demand from data centers. While investor interest remains strong, clean energy deals have slowed due to policy headwinds and IRA uncertainty. The sector is pivoting toward dispatchable generation and grid reliability, with conventional assets gaining momentum. Despite challenges, robust infrastructure demand is expected to sustain deal flow through the second half of 2025.

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