NRG Energy will buy a portfolio of gas-fired power generation facilities valued at $12 billion from LS Power Equity Advisors, as the Houston-based firm bets on the growing U.S. electricity demand.
The deal for the portfolio of natural gas generation facilities and a commercial and industrial virtual power plant (C&I VPP) platform from LS Power will be a cash and common stock transaction, NRG Energy said on Monday.
The acquisition will double NRG’s generation capacity with the addition of 18 natural gas-fired facilities totaling approximately 13 gigawatts (GW). These facilities, located across nine states, expand NRG’s generation footprint in the Northeast and Texas, where most of its load is located.
“We are in the early stages of a power demand supercycle, and we are excited to lead the way with reliable energy solutions that will drive considerable value for NRG and all of our stakeholders,” NRG chief executive Larry Coben said.
In recent months, U.S. power utilities have announced billions of U.S. dollars in capital plans for the next few years and are getting a lot of requests from Big Tech for new power capacity in certain areas to meet soaring demand from the AI boom. All power sources will be needed, but natural gas and renewables are set to be the early beneficiaries of the demand surge.
By 2035, data centers are set to account for 8.6% of all U.S. electricity demand, more than double their 3.5% share today, BloombergNEF said in a report last month. U.S. data-center power demand will more than double over the next decade, rising to 78 GW in 2035 from nearly 35 GW in 2024.
Goldman Sachs, for its part, sees U.S. electrical power demand rising by 2.4% each year through the end of the decade, with AI-related demand accounting for about two-thirds of the incremental power demand in the country.
“The US is reaching a power demand inflection point due to the rise of energy-intensive artificial intelligence (AI), the need for more AI-ready data center capacity, and the reshoring of manufacturing,” Goldman Sachs analysts wrote in a report earlier this year.
By Charles Kennedy for Oilprice.com
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