Operating Power Plants Command Premium as AI Demand Collides With Grid Delays

Existing Generation Assets Surge in Value

Utilities and infrastructure investors spent nearly $142 billion acquiring operating power plants in 2025, reflecting a fundamental shift in how the industry responds to surging electricity demand from artificial intelligence workloads. Rather than building new capacity and waiting years for grid connection approvals, buyers are paying premiums for generation that can deliver power immediately.

The trend stems from a collision between AI-driven data center expansion and systemic grid constraints. Permitting bottlenecks, equipment shortages, and interconnection backlogs now routinely push new generation projects out by multiple years. That delay has created what Deloitte calls a market for "deliverable capacity"—operating plants with established grid connections that can be secured at scale and energized quickly.

"It has become critical because US power demand is rising due to AI-driven digital infrastructure expansion and electrification, while new generation and grid infrastructure remain slow and costly because of permitting delays, interconnection backlogs, supply chain constraints and capital needs," said Thomas Keefe, vice chair and US Power, Utilities & Renewables leader at Deloitte.

Transaction Multiples Nearly Double

Valuations reflect the urgency. Transaction multiples for operating plants nearly doubled between 2024 and 2025, according to Brynna Foley, an investment research analyst at Enverus. Even with that appreciation, many existing assets still trade below the cost of building comparable new generation—a gap Foley describes as a "buy-to-build" premium.

Natural gas plants dominated deal flow. Buyers acquired 62 gigawatts of gas-fired generation in 2025, representing 43 percent of all generating capacity transacted and totaling nearly $89 billion across 23 deals. Gas assets offer dispatchable power and near-term energization, making them particularly attractive as data center developers prioritize speed over greenfield timelines.

Capital costs for new gas plants rose roughly 40 percent between 2015 and 2025, Foley noted, further tilting economics toward acquisition.

Speed to Power Reshapes Strategy

The premium extends beyond megawatts to include interconnection rights, transmission access, and the infrastructure that enables rapid deployment. Data center developers are increasingly pursuing behind-the-meter strategies—siting generation at or adjacent to facilities—and "bring-your-own-generation" approaches that reduce reliance on congested grid upgrades.

Transaction activity concentrated in PJM Interconnection and the Electric Reliability Council of Texas throughout 2025, though deal flow has since slowed. Foley attributes the slowdown partly to large independent power producers completing major acquisitions and focusing on balance sheets, as well as a shrinking supply of high-quality portfolios.

Regulated utilities face different economics than merchant generators. While merchants benefit directly from tight markets and rising capacity values, utilities earn authorized returns on their rate base and must justify acquisition premiums to regulators by demonstrating clear ratepayer benefits. That dynamic often steers utilities toward transmission and grid investments rather than generation purchases.

Why it matters

This shift signals that grid infrastructure—not chip design or cooling technology—has become the binding constraint on AI deployment at scale. When existing power plants command premiums despite rising construction costs, it reveals how severely interconnection delays are limiting data center expansion. For hyperscalers and enterprise buyers, the implication is clear: securing power access now requires controlling generation assets, not just negotiating utility contracts.

Keefe expects ownership to continue concentrating among large, well-capitalized participants capable of assembling balanced portfolios that deliver capacity with speed and certainty. As AI workloads continue to outpace the rate at which new generation can reach the grid, existing plants are becoming valuable not simply because they produce electricity, but because they can deliver it years sooner.

These details were first reported by Data Center Knowledge.