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Political uncertainty stalls deal activity despite widespread investor interest
The power and utilities sector in the last year has seen increased organic capital investment on the heels of the Inflation Reduction Act, but faced uncertainty surrounding the US presidential election affecting deal market activity. In the years ahead, we expect strategic focus and growing electricity needs to fuel significant capital investment and deal activity.
Executives in the sector closely monitored the November election races that had the potential to impact the sector. Most important was the re-election of Donald Trump as US president, which will likely lead to policies favoring traditional energy sources, including a relaxation of environmental regulations and an uptick in investment in fossil fuel infrastructure. Despite the changes in the White House, we expect renewables to continue to be a focal point in the industry for organic capital investment, as we do not anticipate wholesale changes to federal support in the sector in the near-term with upcoming demand growth expectations and historical bipartisan support.
- Over the last 12 months (November 2023 to November 2024), the power and utilities industry saw a significant decrease in the number of renewable and clean energy deals, down to 13 in 2024 from 27 in 2023, 28 in 2022 and 29 in 2021.
- The anticipation of the US presidential election contributed to a slowdown in renewable energy deals, as market participants braced for potential shifts under a possible new administration.
- While substantial organic capital continued to flow into the sector in 2024, inorganic deals activity is expected to slow in the near term, as industry participants await clarity in future federal policy from the Trump administration.
- Fossil fuel generation deal activity saw an uptick over the past 12 months. Deals in fossil fuel generation accounted for 19% of total deal value over the last 12 months, more than double the 2023 level of 7%. Deals within this subsector were driven by expectations of continued need for natural gas infrastructure to ensure reliability. We expect the number of fossil generation deals will continue to climb under a Republican-controlled White House and Congress.
Note: The primary M&A data source used in the 2025 outlook is S&P Capital IQ.
Strategic thinking
In the last 12 months, 30 deals were completed in the power and utilities sector — down from 52 in 2023, 36 in 2022 and 56 during the historically active deals market of 2021. Similarly, total deal value totaled $27.8 billion, down from total deal value of $43.3 billion in 2023, $36.3 billion in 2022 and $53.3 billion in 2021. Despite the lower overall number of deals and value, there were several large transactions in the sector, including a $6.3 billion megadeal, which accounted for 22.7% of deal value in the sector in 2024. With a focus on renewables and clean energy, contributions from both strategic and financial investors remained strong. However, political uncertainties are expected to impact deal activity and further slow renewable energy transactions. On the bright side, value propositions in the short-term in the sector remain strong — with many strategic, financial and inbound investors actively interested in deploying capital.
“Widespread interest from strategic, financial and inbound investors remains strong in the industry, with political policy changes remaining top of mind for dealmakers.”
The bottom line
The power and utilities sector continues to have widespread interest from strategic, financial and inbound investors. Solid deal volumes continue as industry participants look to the sector for avenues for deploying capital, a continued focus on environmental, social and governance (ESG) initiatives, and to drive value through supportive infrastructure plays. While uncertainties surrounding how upcoming changes to political policies may impact near term dealmaking, broader sector support is expected, which will drive deal activity in the years ahead.
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