AI fuels record $200bn M&A boom in US power sector

{"text":[[{"start":10,"text":"The AI boom is fuelling a record surge in dealmaking in the US power and utility industry, as companies compete for capital to build energy infrastructure for data centres."}],[{"start":20.15,"text":"Merger and acquisition transactions in the sector hit a record $203.6bn in the first five months of the year, more than 40 per cent higher than the $141.7bn figure for the whole of last year, according to research by Deloitte."}],[{"start":35.849999999999994,"text":"Investment in data centres was $151.5bn, more than double the $68.7bn announced over the same period a year earlier. Investment in data centres in all of 2025 was $321bn."}],[{"start":null,"text":"

"}],[{"start":49.74999999999999,"text":"NextEra Energy’s proposed takeover of Dominion, which had an enterprise value of $112bn, was the largest power/utility deal announced this year, closely followed by BlackRock’s Global Infrastructure Partners and EQT’s purchase of AES Corp, which had an enterprise value of $33bn. There were 77 power/utility deals announced in the first five months of 2026, compared to 157 transactions announced in all of 2025."}],[{"start":80.35,"text":"Deloitte compiled the M&A data from S&P Capital IQ database, which measures transactions using enterprise value — a metric that includes a company’s equity and debt, minus its cash reserves. US power sector M&A covers regulated utilities, natural gas generation and renewables."}],[{"start":97.5,"text":"The explosion in dealmaking in a highly regulated industry is being driven by companies seeking to build scale to capitalise on data centre construction and on a growing trend among companies to divest non-core businesses to finance expansion. Private capital has also been attracted to the utility industry, either by taking some assets private or pursuing minority investments."}],[{"start":120.85,"text":"“We are seeing a lot of interest from private equity and infrastructure funds,” said Thomas Keefe, senior leader at Deloitte’s US power, utilities and renewables division. “Financial buyers are particularly interested in the kind of consistent cash flows that utilities can provide.”"}],[{"start":136.79999999999998,"text":"Keefe said the AI boom had transformed the growth outlook for utilities and power producers with some companies forecasting 50 to 100 per cent revenue growth over the next five to 10 years. "}],[{"start":148.95,"text":"Utilities need to raise tens of billions of dollars to build power plants and transmission lines to serve data centres in order to grow their customer base. As regulated monopolies, their customer base is largely fixed by geography."}],[{"start":163.7,"text":"“There’s a lot of capital investment that needs to be made, the question is who is paying for it? Scale makes a lot of sense,” said Alex Kania, a utilities and power analyst at BTIG."}],[{"start":175.25,"text":"The blockbuster deal between NextEra and Dominion gives the latter access to the Florida-based company’s stronger balance sheet, which could lead to a credit rating upgrade for Dominion’s utilities in Virginia and North and South Carolina. This would allow them to issue cheaper equity and access debt on more favourable terms."}],[{"start":195.5,"text":"The increased power demand from the build-out of facilities required to store an ever-growing amount of data has created “a seemingly unstoppable trend line”, said George Bilicic, global head of power, energy and infrastructure at Lazard."}],[{"start":211,"text":"Bilicic said the boom in power demand goes well beyond AI: “Electrification, the re-industrialisation trend, the rise of EVs and a general GDP-related power demand is a big part of it."}],[{"start":223.55,"text":"“On top of that, you have hyperscaler and data centre demand driving additional growth but, even without it, you would still see above-norm growth.”"}],[{"start":233.15,"text":"Analysts said the rapid uptick in dealmaking would attract extra scrutiny from regulators because of growing political concerns over electricity affordability. Electricity costs are up 9 per cent nationally since last year, including 8 per cent in North Carolina and South Carolina and 15 per cent in Virginia, where Dominion operates."}],[{"start":257.3,"text":"Consumer advocates warn mergers could increase costs for consumers by strengthening utility companies’ monopoly power, allowing them to influence regulatory codes and shift costs on to ratepayers. "}],[{"start":269.40000000000003,"text":"Across the country, politicians from both parties have criticised utilities for high consumer costs, with senators Elizabeth Warren, Chris Van Hollen and Richard Blumenthal launching an investigation into data centres’ role in rising prices, arguing that utilities and Big Tech are making families “bankroll” their incurred costs."}],[{"start":289.75000000000006,"text":"Warren, ranking member on the Senate banking committee, on Monday wrote to BlackRock, Blackstone Group, Brookfield Infrastructure Partners and KKR seeking information on their ownership of data centres and utilities. In December, she pressed BlackRock and Blackstone for information on their utility acquisitions."}],[{"start":309.05000000000007,"text":"NextEra’s previous attempts at merging with Hawaiian Electric and Duke Energy failed."}],[{"start":314.75000000000006,"text":"The utility and power producer industry argues increased scale will enable companies to cut costs and pass on savings to consumers. "}],[{"start":322.75000000000006,"text":"In Florida, where NextEra’s subsidiary Florida Power & Light operates, electricity costs have decreased by 2 per cent since last year, while the company claims its customers pay 19 per cent less than in 2019. As a sweetener for the mega-merger, NextEra has offered $2.25bn in customer bill credits for customers in Dominion’s coverage areas."}],[{"start":345.40000000000003,"text":"Consumer advocates in Virginia reject this argument, saying bill credits will quickly run out, leaving customers exposed to long-term risks. “There’s a strong sense that average people are getting screwed in Virginia,” said Brennan Gilmore, executive director of Clean Virginia, an anti-corruption non-profit and political action committee."}],[{"start":373.95000000000005,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1782720935_2983.mp3"}