Artificial intelligence’s unprecedented power demand poses an opportunity for investors and acquisition targets, but structural constraints in the power and utilities market ask for careful, highly focused risk-managed strategies.
That's among the findings in Deloitte's report on 2025 merger-and-acquisition (M&A) activity in the power sector titled “Who Will Own the Power? AI Data Centers Drive Power and Utilities M&A.”
AI data centers drove record power and utilities M&A activity in 2025, and by 2035, they are projected to require 176 GW of power nationally. The demand is an investment opportunity for power and utilities, but one that should include great care given the risk of permitting delays, regulatory uncertainty, supply chain constraints, and upfront capital requirements.
M&A Transactions Signal Strategic Consolidation
U.S. power sector M&A has been stratified across three submarkets, according to the report: regulated utilities, natural gas generation, and renewables. Although M&A dynamics differ among these submarkets, transactions are increasingly centering on a single objective: securing deliverable capacity at scale.
To achieve it, the industry appears to be consolidating around well-capitalized companies capable of executing large multimarket strategies that balance capacity, portfolio reliability, capital efficiency, and durable cash flows.
In line with these inclinations, the U.S. power and utilities M&A market saw record transaction value last year with US$142 billion in transactions across 157 deals. Over 144 GW – 10% of total US nameplate capacity – exchanged hands through dealmaking in 2025. Natural gas accounted for over 40% of the capacity transacted in 2025, while renewables (mostly solar and energy storage) represented more than half of total megawatts transacted.
Consolidation can improve an organization’s ability to compete, access capital, and execute transactions efficiently, and a recent Deloitte M&A Trends survey reflects these ideas: Seventy-eight percent (78%) of the surveyed power and utilities executives pursuing transactions cite acquisitions (51%) and mergers (27%) as their top areas of interest. Ultimately, as power markets tighten, a portfolio strategy is emerging in power M&A, centered on rate-based growth platforms; reliability-oriented assets like natural gas generation and energy storage; and firm renewable and hybrid assets, including solar, storage, and co-located generation.
Regulated Utilities Offer Stable Growth
Facing unprecedented load growth, record capex expansion, and mounting affordability pressures, some utilities are prioritizing core electric operations and rate-based growth while divesting from non-strategic operations, including non-core natural gas distribution and unregulated renewables businesses.
Private capital appears to be increasingly targeting stable rate-based returns as well as regulated grid and load-driven infrastructure expansion. At the same time, some utilities are leveraging long-term contracts and partnerships to reduce execution risk for those infrastructure investments. Investors have used both minority equity investments and selective full take-private transactions to achieve these aims.
However, regulatory risk is an important decision factor: Regulated utility dealmaking last year concentrated in 20 states, five of which were among the nine states ranked as lower-than-average regulatory risk environments.
Natural Gas Generation Activity Accelerates
Operating gas assets can offer secure firm capacity amid tightening reliability and supply chain constraints. In fact, over 62 GW of natural gas generation capacity was transacted in 2025, up four times 2024’s level (15 GW) as buyers competed for assets in data-center heavy markets like PJM, ERCOT, and CAISO. Private equity now owns nearly 20% of all operating gas power capacity in the U.S.
At the same time, gas-fired generation M&A valuations doubled over 2024 levels, reflecting buyer competition amid elevated new-build turbine pricing and manufacturing backlogs.
Renewable Energy Investors Prioritize Late-Stage, Derisked Targets
Renewables remained the largest drivers of power-related M&A in 2025, accounting for more than 75 GW – or over half of all capacity transacted – up from 61 GW in 2024. Solar and storage are gaining momentum, together comprising 47% of transacted capacity in 2025 combined Investors appear to be prioritizing late‑stage, de‑risked assets that can reliably deliver capacity over greenfield development.
Meanwhile, investment in offshore wind is waning due to policy and regulatory headwinds, driving project cancellations, sponsor retrenchment, and limited price discovery. As a result, wind transactions slowed materially in 2025
What’s Next
Deloitte offers some potential ways forward for utilities, owners, and investors in these submarkets looking to capitalize on M&A opportunities:
- Regulated utilities can use strategic divestitures and acquisitions to deepen their core electric exposure within advantaged markets and raise capital for rate-based growth.
- Generation owners can monetize their reliability attributes through life extensions, uprates, repowering, and selective consolidation to lower unit costs, improve dispatch economics, and enhance access to financing for capital-intensive upgrades.
- Renewable developers can secure growth capital by optimizing their capital cycling through M&A to help fund new pipelines, de-risking power purchase agreement (PPA) strategies, and leveraging tax credit transferability and hyperscaler partnerships.
- Private equity and infrastructure investors can help position their portfolios for the next exit cycle by balancing exposure across the three submarkets and targeting undervalued infrastructure platforms with a resilience premium.
Last year was a transformative year in power and utilities M&A, and similar activity is likely to continue throughout this year. Ownership is expected to concentrate among large, well-capitalized participants that can assemble balanced portfolios for growth, reliability, and firm capacity. An objective is delivering scale while enhancing speed, certainty, and durable cash flows in the power market.
