Energy transactions approach record levels as energy grid demand escalates

Last year, deals and acquisitions, as indicated by JLL, amounted to a staggering $57 billion, showing a notable increase from the $52 billion recorded the year before.

, and Administrator

2025 September 13 . 2:13 PM

2 min read

Grid negotiations reach unprecedented levels as energy demand escalates substantially

Energy transactions approach record levels as energy grid demand escalates

In the world of energy, a utility, choosing to remain anonymous due to client privacy, has revealed a pressing issue: a fivefold increase in its capital budget is necessary to bring the grid up to standard. This revelation comes as the utility steers clear of seeking permission from regulators to raise rates further.

Instead, the utility is prioritizing infrastructure investments over routine maintenance. This shift in focus means that projects like repaving a parking lot may be put on hold, with the funds instead being channeled towards strengthening the grid and increasing generation capacity.

Significant increases in rates are anticipated as a result, a predicament that involves finding a balance between infrastructure investments and rate increases for retail consumers.

Ed Connolly, who has worked with utility clients for 14 years, sheds light on this issue. He notes that load growth is straining the aging grid, and many utilities are now looking to spin off unregulated assets to generate funds for expanding generation capacity and reinvesting in the grid.

The struggle for this anonymized utility, however, goes beyond the U.S. borders. In 2024, the utility announced plans to increase the capital capacity of its infrastructure in Malaysia, particularly in Johor, to meet the growing electricity demand driven by data centers.

This trend was reflected in the deal volume of 2024, which saw a 50% increase from 2022, totalling $57 billion nationwide. Gas and pipeline companies accounted for 70% of this total, with the U.S. power sector, including both generators and distribution companies, following closely behind.

However, this rapid growth in deal volume does not come without its own challenges. In the past, many companies have delayed infrastructure investments by "kicking the can down the road." This approach, while providing short-term relief, can lead to long-term issues, as seen in the current predicament of the anonymized utility.

Ed Connolly also emphasizes the deficiency of the current grid in meeting the projected demand of power from hyperscaler data companies, battery companies, semiconductors, and advanced manufacturing in the U.S. This underscores the importance of proactive infrastructure investments for the sustainability and growth of the energy sector.

In conclusion, the utility's challenge lies in navigating the delicate balance between infrastructure investments and rate increases, ensuring the continuous supply of electricity while maintaining affordability for retail consumers. This issue is not unique to this utility but is a growing concern for the energy sector as a whole.