Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Constellation Energy is in advanced talks to acquire Calpine in what could be one of the largest takeovers in the power generation industry, according to people familiar with the matter.
A deal by the Baltimore-based utility to buy Calpine would also generate a huge windfall for the company’s private equity investors Energy Capital Partners, CPP Investments and Access Industries, who acquired it in 2017 for $17bn including debt. A deal could be announced as early as this month, said one person with direct knowledge of the matter.
The takeover talks come amid an unprecedented surge in power demand forecasts linked to the roll out of artificial intelligence data centres and reshoring of manufacturing activities, which has caused Constellation shares to almost double in value over the past year.
The US electricity system is grappling with a historic rise in power demand after two decades of negligible growth. Consulting firm ICF expects the country’s power consumption to grow by nearly 20 per cent by 2033.
Expectations of surging power demand have been a boon for cheap natural gas-fired generation, which unlike solar and wind is available around the clock. GE Vernova, the largest gas turbine manufacturer, expects orders to have nearly doubled last year.
Constellation operates the largest fleet of conventional nuclear reactors in the US and last year announced it planned to reopen the Three Mile Island nuclear plant in Pennsylvania.
Calpine operates a fleet of 78 gas plants and other energy facilities across the US, which generate enough electricity to power about 27mn homes.
Constellation Energy and Calpine did not immediately respond to requests for comment.
