The latest action took place this week, when a subsidiary of the Abu Dhabi Investment Authority (ADIA) agreed to make a $500 million minority investment in AlphaGen, one of the largest independent power portfolios in the U.S.
AlphaGen, led by former Vistra CEO Curt Morgan, was formed by ArcLight Capital Partners about a year ago. The 11 GW power portfolio includes 22 natural gas- and oil-fired plants in California and the Northeast.
The ADIA investment remains subject to regulatory approvals and is expected to close in the first half of 2025.
As Scott Wilmot of Enverus noted, large international companies are making significant investments to establish growth platforms and capitalize on the market trends mentioned above. This includes Repsol’s $700+ million acquisition of ConnectGen and Engie’s $1 billion purchase of Broad Reach Power in 2023.
“With these dynamics and the growing influence of artificial intelligence, we expect the U.S. to remain a key target for international investors,” said Wilmot, who is Vice President of Power & Renewables at Enverus.
International investor or otherwise, the mega trends of cheap, incentivized renewables and surging demand growth continue to drive investment and Merger & Acquisition (M&A) activity in the power generation market
More recently, Enverus is seeing increased interest in reliable gas generation capacity.
“Many independent power producers (IPPs) and private equity funds are looking to gain exposure to gas fired generation portfolios with the belief that growing power demand will improve their economics,” said Wilmot.
While Wilmot notes 2022-2023 was focused on renewables, more recent deals like TransAlta’s Heartland acquisition (Nov 2023), Capital Power’s $1.1 billion investment in California and Arizona assets (Nov 2023) and Quantum’s $3 billion dollar acquisition of Cogentrix (Aug 2024) highlight the growing interest in gas-fired assets.
Last week, Constellation announced the acquisition of Calpine in what becomes one of the biggest in the history of power generation. Constellation already owns and operates the largest fleet of nuclear plants in the United States. It now plans to bring aboard Calpine’s fleet of 78 energy facilities – including natural gas-fired, geothermal, solar and battery storage, representing around 27,000 MW of capacity.
Wilmot also said there has been a shift in policy to support new natural gas builds, such as the Texas Energy Fund. The program provides 3% interest loans to build or upgrade gas-fueled power plants — an idea lawmakers passed after the 2021 winter storm overwhelmed the state grid, triggering blackouts that left millions of Texans without electricity or heat for days in freezing conditions.
