Industry Trends
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
Advised Western Milling in their sale to the Western Milling ESOP Trust
Executive Summary
M&A activity in the Power & Energy sector continued its moderate trend through Q2 2025, with 297 transactions closed in the last twelve months (LTM), a decline from 351 in the prior year. Strategic buyers remained the primary drivers of activity, accounting for 77.1% of transactions, while financial buyers represented 18.5%, and the remaining 4.4% of buyers was undisclosed. This trend signals a market focused on consolidation and operational scale. Despite lower deal volume, valuation multiples showed resilience. The median LTM TEV/EBITDA multiple increased to 10.47x from 10.23x, and the median TEV/Revenue multiple rose to 3.47x from 3.20x, suggesting that high-quality assets are still commanding premium valuations from discerning buyers.1
Market Dynamics
Power & Energy transaction volume decreased by 15% year-over-year for the LTM period ending Q2 2025, extending a multi-year slowdown from a peak of 507 deals in 2021. This continued decline reflects a disciplined market shaped by elevated interest rates and macroeconomic uncertainty. However, the uptick in valuation multiples from 10.23x to 10.47x TEV/EBITDA indicates a "flight to quality," where buyers are willing to pay more for assets with strong fundamentals, predictable cash flows, and strategic importance in the evolving energy landscape.
Buyer Landscape
Strategic Acquirers: Leading the market with 229 transactions (77.1%), strategic buyers focused on acquiring key infrastructure and technology to support the energy transition. A key deal was Capital Power's $2.2 billion acquisition of two flexible generation assets, enhancing its capacity to support grid reliability.1
Financial Buyers: Closing 55 deals (18.5%), financial sponsors targeted large-scale, regulated, and commercial energy assets. The quarter's largest transaction was led by financial buyers, with KKR and PSP Investments acquiring AEP's transmission assets for $2.8 billion, highlighting private capital's role in funding critical infrastructure.1
Industry Comparison
The Power & Energy sector's 15% year-over-year decline in deal volume is more pronounced than in resilient sectors like Technology and Healthcare. However, the presence of billion-dollar deals, such as KKR's acquisition of AEP's transmission assets, signals that strategic imperatives for infrastructure modernization and scale can override broader market hesitancy. The sector's rising valuation multiples suggest a bifurcation, where premier assets attract strong competition while the broader market remains cautious.
Geographic Expansion
Top U.S. States: Transaction activity was concentrated in key energy hubs, with Texas (55 deals), California (22), and Pennsylvania (12) leading the nation. This geographic focus highlights the enduring importance of established oil and gas basins alongside growing renewable energy development in these states1
Cross-Border Trends: Activity was predominantly domestic, though international interest in the U.S. energy transition remains. LG Energy Solution's (South Korea) $2.1 billion deal to take full control of a Michigan battery plant underscores the global race to secure supply chains for electric vehicles and energy storage.
Notable Transactions
Largest Transactions Closed
| Target | Buyer | Value ($mm) |
| AEP Ohio Transmission Co., Inc. / AEP Indiana Michigan Transmission Co., Inc. | KKR & Co. Inc.; Public Sector Pension Investment Board | $2,820.00 |
| Altus Power, Inc. | TPG Global, LLC | $2,514.26 |
| Dow InfraCo, LLC | Macquarie Asset Management Inc. | $2,100.00 |
| Two Flexible Generation Assets in PJM | Capital Power Corporation | $2,200.00 |
| Battery Cell Plant in Lansing, MI | LG Energy Solution, Ltd. | $2,080.00 |
| Electrical Products Group of Avail | nVent Electric plc | $975.00 |
| Six power generation facilities | NRG Energy, Inc. |
$560.00 |
| The Dayton Power and Light Company | Caisse de dépôt et placement du Québec | $546.00 |
Other Strategic Buyer Transactions Closed
| Target | Buyer | Value ($mm) |
| Natural Gas Compression Systems | Archrock, Inc. | $266.70 |
| Pintail Alternative Energy, L.L.C. | RPC, Inc. | $244.64 |
| Tuolumne Wind Project | Clearway Energy, Inc. | $207.00 |
| Accelerated Water Resources, LLC | Lea & Eddy Holdings, LLC | $180.00 |
Other Strategic Buyer Transactions Closed
| Target | Buyer | Value ($mm) |
| Pattern Energy Group LP | APG Asset Management NV; ART Group | n/a |
| Natural Gas Pipeline Co. of America | ArcLight Capital Partners, LLC | n/a |
| Birdsboro Power LLC | Strategic Value Partners, LLC | n/a |
| RESA Power, LLC | Kohlberg & Company, L.L.C. | n/a |
Source S&P Capital IQ as of 7/1/2025 and PCE Proprietary Data
Emerging Trends
Key trends shaping Power and Energy M&A:
- Grid Modernization and Electrification
M&A is increasingly driven by the need to upgrade aging grid infrastructure and support widespread electrification. Deals for companies like nVent (electrical products) and transmission assets reflect a focus on acquiring the fundamental building blocks of a modernized, resilient grid.2 - Energy for AI and Data Centers
The exponential growth of artificial intelligence is creating unprecedented demand for power, catalyzing investment in generation assets. Deals for power plants, like Capital Power's acquisition of flexible generation assets, are partly aimed at serving this burgeoning, high-growth demand center.3 - Decarbonization Technologies
Corporates and financial sponsors are actively pursuing assets in the carbon capture, utilization, and storage (CCUS) and renewable fuels sectors. These investments are aimed at aligning portfolios with long-term decarbonization goals and capitalizing on supportive government incentives.4 - Nuclear Power Renaissance
A renewed interest in nuclear energy is emerging, driven by the need for reliable, 24/7 carbon-free power to support AI and data centers. This includes investments in existing plants and growing momentum for next-generation technologies like small modular reactors (SMRs).5 - Subsector Spotlight: Power Generation
This subsector is a focal point of M&A as utilities and investors seek to balance reliability with decarbonization. Assets with flexible generation capabilities that can support intermittent renewables are commanding premium valuations. - Subsector Spotlight: Energy Equipment & Services
Consolidation continues among service providers as companies aim to offer integrated solutions. Deals are focused on acquiring specialized technologies and expanding service offerings to support efficiency, from drilling to renewable project development.
Outlook for Next Quarter
Opportunities: The urgent need for new power generation to support AI and data center growth will likely fuel a wave of M&A, from acquiring existing power plants to investing in new development platforms. Investment in nuclear technology, from extending the life of existing plants to funding the development of SMRs, will also present long-term growth opportunities for specialized engineering firms and institutional investors.
Risks: Regulatory uncertainty, particularly around permitting for large-scale infrastructure projects, could delay or complicate deal execution. Persistent supply chain constraints for key components like transformers may also impact growth-oriented transactions.
Predicted Activity: Expect continued divestitures of non-core assets by large corporations seeking to streamline their portfolios. Private equity firms, armed with significant dry powder, are expected to remain active, pursuing take-private deals and forming strategic partnerships to fund large-scale energy infrastructure projects.6
PCE Transactions
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