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Power and utilities M&A surges on strategic consolidation and infrastructure demand
The power and utilities sector is undergoing a dramatic transformation, driven by a wave of consolidation and strategic dealmaking aimed at bolstering scale and reliability in an increasingly complex energy landscape. As policy shifts recalibrate incentives away from renewables towards conventional generation and infrastructure, investors are doubling down on assets that promise stable, dispatchable power to meet surging demand from rapidly expanding data centers and digital infrastructure. This dynamic reflects a sector at a crossroads—balancing urgent short-term demand needs with shifting federal policy.
In the last 12 months (November 2024 to November 2025), the sector experienced another strong year of deal activity, with total announced deal value reaching $141.9 billion across 35 transactions, a considerable increase from the prior year’s total.
Activity was propelled by four primary drivers:
Load growth opportunities from electrification and accelerating data center and AI-related demand
Continued portfolio rationalization among regulated utilities
Return of regulated utility mergers after several years of limited activity
Deployment of infrastructure fund capital, as investors sought long-term, income-generating assets
Strategic investors accounted for 63% of total deal value, while corporate-level transactions comprised 91%, underscoring a broad growth and consolidation trend across the industry. Smaller and mid-tier utilities increasingly sought combinations to strengthen balance sheets and capture scale ahead of rising reliability and electrification needs.
Key 2025 transactions:
- Reliability-focused generation: Constellation’s $29 billion acquisition of Calpine and NRG Energy’s $12.5 billion purchase of LS Power underscored the growing importance of dispatchable natural gas generation, supporting AI and data-center demand.
- Regulated utility mergers: American Water Works’ $20.1 billion acquisition of Essential Utilities highlighted water resilience, while Black Hills–NorthWestern Energy’s proposed merger signals possible further sector consolidation.
- Infrastructure and portfolio shifts: CPPIB and KKR’s $19.5 billion investment in Sempra Infrastructure Partners (September), reflect strong investor confidence and capital deployment in US energy infrastructure.
Policy and market shifts
Since President Trump’s inauguration, the industry has recalibrated around a policy agenda emphasizing deregulation, fossil fuel expansion, and reduced clean energy incentives. Examples include:
The One Big Beautiful Bill Act (OBBB)
Phasing down Production Tax Credit (PTC) and Investment Tax Credit (ITC) for wind and solar
Extending incentives for storage and nuclear energy through 2032
These changes, combined with increased foreign–entity–of concern (FEOC) and domestic content provisions, have complicated renewable project pipelines and financing. Consequentially, renewable deal flow declined, while conventional generation, infrastructure, and grid-reliability assets attracted greater investor focus given clearer regulatory frameworks.
Key M&A trends set to influence
Over the next several months, the power and utilities sector will continue to navigate a complex policy and demand environment shaped by the implementation of the OBBB and the accelerating energy needs of data centers. Propelled by AI, cloud computing and digital infrastructure expansion, data centers are sustaining record electricity demand and reinforcing the need for dispatchable generation.
At the same time, the recalibration of federal energy incentives is prompting investors to prioritize reliability, scale, and capital efficiency. Traditional and hybrid generation assets, including gas-fired and midstream infrastructure, have regained traction. A broad group of investors are expected to continue deploying significant capital to capture these structural load growth trends.
Dealmakers should continue to focus on identifying scalable, high-availability energy infrastructure capable of supporting nonstop demand, particularly near major digital load centers. Partnerships between utilities, data center operators, and developers will be critical to overcoming interconnection and capacity constraints, while supporting grid resiliency and investment certainty.
Key subsector considerations:
“Policy shifts, the need for an 'all of the above' energy strategy and forecasts for surging demand are driving transactions focused on securing reliable generation and strengthening market position.”
Kenyon Willhoit,Deals Principal, Power and UtilitiesThe bottom line
Over the past year, power and utilities deal activity has surged, driven by load growth opportunities from electrification and accelerating data center and AI-related demand, continued portfolio rationalization among regulated utilities, the return of large, regulated utility mergers, and deployment of infrastructure fund capital into long-duration yield oriented assets.
Investor appetite across the sector remains strong. Backed by strengthened balance sheets and a strategic push for scale and reliability, the sector is poised to sustain elevated deal momentum into 2026 as a participants' position for growth.
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