US power deals down 36% in last year due to political uncertainty, PwC says

NEW YORK (Reuters) - The value of U.S. power and utilities deals fell over the last year to $27.8 billion, down by 36% from 2023, as political uncertainty ahead of the Nov. 5 presidential election slowed transactions, a PwC report said on Thursday.    

WHY IT'S IMPORTANT

Renewable power deals flourished as a result of U.S. President Joe Biden's climate and infrastructure legislation, which provides hefty funding for the development of electricity generation sources like wind and solar. 

The prospect of switching to an administration led by President-elect Donald Trump, who has been critical of climate-related spending, has brought deals to a multi-year low in a slowing trend that is expected to continue into 2025.

BY THE NUMBERS 

The number of completed mergers and acquisitions in the country's power and utilities sector in 2024 dropped to 30, from 52 in 2023, 36 in 2022 and 56 in 2021, according to PwC's Power & Utilities: US Deals 2025 outlook.

The total value of the deals was also sharply lower from the $43.3 billion in 2023, $36.3 billion in 2022 and $53.3 billion in 2021.

Fossil-fired power generation deals, meanwhile, saw an increase in 2024. Natural gas-fired power and other fossil fuel power deals accounted for 19% of total deal value, more than double what was seen in the previous year. 

WHAT'S NEXT

Renewable power deals are expected to continue to slow under Trump and a Republican-led Congress, while the number of fossil generation deals is expected to grow. Organic investment in renewables like wind and solar, however, is expected to remain steady.

KEY QUOTES      



"Most important was the re-election of Donald Trump as U.S. 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," PwC said.

"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."

Source: Investing.com