It’s no secret that energy, particularly in the form of electricity, has become the foundation of dealmaking in anticipation of the need for hyperscale computing and data storage.
But the demand for power and utility deals, large and small, would be hard to overstate.
In the first three quarters of 2025, Texas lawyers handled more M&A transactions involving power and utility projects than in any full year since 2018.
Not only are there more deals, but they are larger. Far larger. In the first three quarters of 2025, Texas-related deals in the power and utilities sector hit $106.5 billion. By comparison, the record-setting M&A year of 2021 saw eight P&U transactions totaling $3.7 billion.
If that comparison doesn’t project the sheer scale of the power grid M&A explosion this year, let’s try another. In Q2 2025, power and utilities deals totaled $31.4 billion. That’s more than the $31.3 billion reported for the sector in 2023 and 2024 combined.
Moreover, consider that Q2 is the lowest quarter in the power sector thus far in 2025. Q1 was higher at $33.2 billion and Q3, at $41.9 billion, ranks highest thus far.
This comes as no particular surprise to Ahmed Sidik, a partner at Kirkland & Ellis in Houston, who’s been handling PE investments across a wide range of power sectors.
“There’s demand for anything that touches on digital infrastructure and artificial intelligence,” says Sidik. And the deals are reaching beyond simple investments in existing power grids and their infrastructure.
Beyond the competition for resources like oil and natural gas comes the demand for the parts, the construction capacity and organizational expertise to plan, build and run increasingly complex power projects to provide the consistency, continuity and massive output required for hyperscale computing and data storage.
“This is on top of energy demand from the societal theme of electrification over the last decade or so. All of this is driving participants in the space to expand their investments in renewables and power generation,” Sidik says.
“The current market is very strong, and I am cautiously optimistic it will continue strong in the coming year,” says Jon Finger, a partner at McGuireWoods in Dallas. The strength of the market goes beyond simple supply and demand. The money is there.”
“Financing is relatively available and competitive, structural tailwinds remain and sell side closings have accelerated in our practice as well,” Finger says.
If there are surprises, they may be in the durability of renewable energy deals that, with some exceptions like offshore wind projects, continue to have investor appeal. Once again, dealmakers attribute that to the overall need for energy, regardless of the politics or the source.
For instance, while a new administration is phasing out tax incentives for renewable projects, they still exist and remain a factor.
“This is particularly true for battery storage,” says Sidik. Renewables have become part of the energy calculus and demand for cost-effective projects remains appealing, often as a complement to traditional energy grid sourcing.
“Different sponsors will have a different appetite for different assets, but there’s still a generally healthy demand for any asset that plays in the overall thesis of a reliable power grid, like large scale transmission, and renewed interest in investments in coal-fired power and nuclear generation projects,” said Sidik.
“There was always demand for reputable developers who can execute on large scale alternative energy projects: distributed generation, onshore solar — those assets that complement what is generally considered a traditional power source like gas-fired power.”
“When you have a demand more generally for reliable energy, I think naturally that’s going to spread demand across all the asset classes,” says Sidik.
Finger and Sidik share optimism that the momentum from the data center frenzy will continue into the new year.
Although he cites substantial work in the area of renewables, Finger says the bread-and-butter of data center development will likely continue to draw on traditional power grid sources — “development of dispatchable gas-fired generation to meet the substantial, consistent load demands of data centers compared with intermittent renewable generation.”
Adds Finger: “Nuclear continues to be an area of focus.”
More than an area of focus, nuclear is a focus of deals.
Since 2011, Irving-based Fluor Corp. has invested about $600 million in NuScale Power, an Oregon-based developer of Small Modular Nuclear Reactors. In 2021, NuScale went public in a deSPAC merger that valued NuScale at $1.9 billion. In September, Fluor began cashing out by selling its interests, which could yield a $1 billion profit.
In January, Constellation Energy Corporation, a major nuclear provider, acquired Calpine Energy, a Houston-based natural gas and geothermal electricity generator, for $26.6 billion.
And in October, Texas-based Fermi America raised nearly $700 million in an initial public offering for a proposed 11-gigawatt hybrid-powered hyperscale data center campus in Reeves County — to include solar power, a natural gas plant and a nuclear power plant.
The demand for power is creating its own set of bottlenecks. Competition is strong, not only for power sources, but also for the expertise to exploit them, the regulatory permissions to run them and the materials and equipment to build them, some of have inventory wait times of years.
In their IPO prospectus, Fermi America, for instance, claimed a reserved spot in the supply chain with letters of intent from Siemens Energy to supply 1.1 gigawatts of F-Class generation, a critical component for both new power plants, as well as aging generation facilities seeking to expand to meet grid needs.
The list does not stop there. High-voltage circuit breakers, transmission cables and transformers are of particular concern, particularly since some are vulnerable to tariffs and other trade restrictions. For instance, imports account for about 80 percent of the U.S. high-voltage power transformer supply and about half of all distribution transformers, according to a recent study by Wood Mackenzie. Meanwhile, U.S. demand for both has increased by 116 percent and 274 percent, respectively.
Both Finger and Sidik express optimism in the fierce AI-driven surge in M&A. What does Finger fear in the coming year?
“Definitely the trade issues and regulatory uncertainty,” he says. “The inherent impact on the ability to have confidence in underwriting future results is the largest impediment to continued growth in M&A.”