Wedding bells are ringing in the energy industry, just as warning sirens blare over the power grid.
Mergers and acquisitions in the fossil gas, oil, and electricity sectors nationwide totaled $57 billion in 2024, double the pre-pandemic levels, according to new data the real estate service provider JLL shared with Latitude Media. That’s up from $52 billion in 2023, which was itself an increase of over 50% from 2022.
Gas, and particularly pipeline companies, dominated the tie-ups, with 60% of all deals and 70% of the transaction volume. The U.S. power sector, including both generators and distribution companies, followed close behind — even as load growth strains the aging grid.
“The current grid is woefully deficient projected demand of power from hyperscaler data companies as well as battery companies, semiconductors and advanced manufacturing in the U.S.,” said Ed Connolly, the managing director and national utility lead at JLL. “This has really put a strain on energy resources.”
Roughly 20% of the overall dealmaking involves private equity funds, he added. “That’s really showing that corporates are realizing they need to do more to meet this projected demand,” said Connolly, who has worked with utility clients for 14 years. “This is really about increasing generation capacity and putting more capital into the grid.”
As a result, utilities are now looking to spin off unregulated assets, he said: “things that aren’t critical to business, so that way they can take the proceeds and put it back into expanding generation and reinvesting in the grid.”
One utility, which he declined to name citing client privacy, said it needed to increase its capital budget fivefold “to get the grid where it needs to be.”
As a result, he said, facilities are “underinvested right now from a capital maintenance standpoint.” In other words, power plants are forgoing routine upkeep like repaving a parking lot to sink utility budgets into infrastructure, rather than asking regulators for permission to hike rates even higher.
“How do you not pass on increased demand from data centers onto retail consumers? That’s the struggle they’re having now,” he said. “There’s going to be significant increases in rates because of money that’s going to go into hardening the grid and increasing generation capacity. A lot of companies in the past just kicked the can down the road.”
