It’s been quite a week for AES. It started with the announcement of a 20-year deal with Google to power an 850 MW data center in Texas with colocated renewables, and peaked on Monday with the official confirmation that the developer is going to be acquired by a consortium led by BlackRock’s Global Infrastructure Partners and EQT, for an enterprise value of $33.4 billion.
The take-private deal, which is one of the largest ever in the utility sector, embodies many of the shifts that the boom in artificial intelligence has brought to energy in recent years. According to Ben Hertz-Shargel, global head of grid edge at Wood Mackenzie, the deal shows that “amazingly, utilities are a growth story” — but to maintain that growth, utilities and power producers must invest money at a scale and speed that is hard to sustain without external help.
This latter point was emphasized bluntly by Jay Morse, chairman of AES’ board of directors, in the executive commentary accompanying the announcement. “AES has a significant need for capital to support growth beyond 2027, particularly given the significant new investments in both U.S. generation and utilities businesses,” he said. “In the absence of a transaction with the consortium, the company would likely require a plan that includes reduction or elimination of the dividend and/or substantial new equity issuances.”
In other words, without this deal, the company would be forced to dilute its shares to raise the cash required to build its large pipeline of projects, which includes 11.8 GW of signed agreements with hyperscalers.
AES’ stock fell Monday, from Friday’s close of $17.28 to $14.21, a dip that has been partly attributed to Morse’s statement. The deal had long included the consortium acquiring AES for $15 a share, but after the stock rose last week in light of the Google announcement, shareholders had reason to expect a higher valuation. Analysts at Jefferies characterized the deal as “disappointing” for that reason.
(That said, the deal wasn’t happening in a vacuum. On Monday, the market in general was under pressure following the weekend’s U.S.-Israeli strikes on Iran.)
Ed Connolly, the managing director and national utility lead at JLL, said that capital planning has always been an issue for utilities, with capital budgets for facilities regularly “getting busted July every year.” But the challenge is being greatly exacerbated by load growth.
“For a lot of utilities, the funding comes from ratepayers, and for rate increases to be approved, they have to go through politically sensitive regulatory approval,” Connolly said. “And when you put in a [load] spike like what you’re seeing in the power generation space, you’re not going to get the money you need purely out of the ratepayers.”
This has led to utilities looking for capital wherever they can find it — and to what “appears to be” increased interest in regulated utilities from private capital, according to a recent report by the Deloitte Research Center for Energy & Industrials.
On this front, the AES acquisition is capping off a busy year. Notably, in June 2025, KKR and PSP Investments made a $2.82 billion investment in 19.9% equity interest in AEP’s Ohio and Indiana Michigan transmission companies. And in August, Brookfield took a $6 billion 19.7% stake in Duke Energy Florida.
And, more broadly, the deal fits into the increase in value of power sector M&A deals that has been driven by load growth. In 2025, nearly $142 billion was spent across 157 transactions in the U.S. power and utilities sector, according to Deloitte, which “exceeded the combined transactions value from 2022 through 2024.”
Two growth stories
Regulated utilities have always been interesting for private equity, and infrastructure investors specifically, because they offer predictable, contracted returns. But AES is a specific case. Unlike a pure-play utility, AES includes both AES Indiana and AES Ohio, which are regulated, rate-based businesses — while also operating as a major independent power producer.
According to Hertz-Shargel, that makes it particularly attractive to private equity investors, as it “gets to take part in both growth stories.” On one side, they secure the protected, predictable returns of the regulated utility businesses. On the other, they get access to the growing behind-the-meter, bring-your-own-generation market, where hyperscalers contract directly with generation developers for dedicated power, in order to work around long interconnection queues.
“You have this new world where there’s much more opportunity and demand to build generation [and] contract generation, which makes it especially attractive to be a generation developer,” Hertz-Shargel said. “AES’ unregulated business stands to benefit from that new model.”
Most companies interested in bringing their own generation to power their data centers are gravitating to gas. xAI, Meta, and OpenAI, for example, have all already opted for BTM gas generation, saying that it’s the fastest way to power that can provide five-nines reliability. Generation developers have also started to pivot in this direction, with NRG optioning and pre-permitting sites to build an advanced gas platform, for example, according to a recent note by Jefferies.
The vast majority of AES’ 12-GW project backlog is solar, wind, or battery storage. Last week’s Google deal will involve connecting an 850-MW Google data center in Texas to a large solar and wind project, allowing it to get online in less than two years. Michael Thomas, founder of research firm Cleanview, noted that the deal shows the potential of co-located renewables in the emerging bring-your-own-generation market. “Amazon and Meta have said they are building gas plants to power their data centers because it’s the fastest path to power. But this week, Google proved you can do it even faster with co-located renewables,” Thomas wrote in a LinkedIn post.
It’s a deal that likely increases AES’ appeal to investors, Hertz-Shargel said.
“If you own the developer, you’re in the driver’s seat of commanding ever-increasing power prices for selling offtakes to large data center companies,” he said. “It’s very attractive to own a renewable generator now, because they’re able to move more quickly than gas, and clean energy is definitely still what hyperscalers prefer and are willing to pay a premium for.”
