AI data centers increase valuation of existing power plants due to premium pricing for firm, available capacity.
As AI accelerates electricity demand, utilities and infrastructure investors are increasingly choosing to acquire operating power plants rather than wait for new capacity to come online. Years-long delays to build and connect new generation—driven by permitting bottlenecks, equipment shortages, and interconnection backlogs—have shifted market economics decisively toward existing assets. According to Deloitte, this represents a shift toward "deliverable capacity": operating generation that can be secured at scale and energized quickly despite tightening reliability, capital, and execution constraints.
"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.
In 2025, buyers strongly favored acquisition over construction. The US power and utilities sector announced nearly $142 billion in transactions, with a pronounced shift toward portfolios of operating generation over greenfield development. Capital costs for gas plants have risen roughly 40% between 2015 and 2025, according to Brynna Foley, an investment research analyst covering power and renewables at Enverus, making existing assets far more attractive to investors.
Valuations reflect the trend. Transaction multiples in 2025 were nearly double 2024 levels, even as operating plants in many cases continue to trade below the cost of building comparable new generation. "That creates a kind of 'buy-to-build' premium," Foley said.
Natural gas has been central to this strategy. In 2025, 62 GW of gas-fired generation changed hands across 23 transactions totaling nearly $89 billion—representing 43% of all generating capacity transacted that year. Gas assets appeal to investors because they offer dispatchable capacity and faster paths to power than many greenfield projects.
The premium extends beyond megawatts to the infrastructure enabling rapid energization—generation assets, interconnection rights, transmission access, and speed to deployment. This emphasis is driving behind-the-meter strategies, where generation is sited at or adjacent to a facility to reduce reliance on grid upgrades, and "bring-your-own-generation" approaches, where developers procure or control dedicated generation to serve new campuses. "Data center developers are increasingly favoring time-to-power," Foley said.
Throughout 2025, acquisitions of independent power producers and private investors surged, particularly in PJM Interconnection and ERCOT. Recently, however, transaction activity has slowed. Foley attributed the slowdown partly to large independent power producers completing major 2025 deals and refocusing on balance sheets, and to a shrinking supply of high-quality, premium portfolios. "We've also seen a few highly efficient plants change hands to private buyers, and there are only so many of those high-quality portfolios in the market," she said.
Merchant generators and regulated utilities face fundamentally different incentives. Merchants benefit directly when tight markets lift energy margins, capacity values, and contracted cash flows. Regulated utilities, by contrast, earn an authorized return on their rate base; most fuel and energy costs pass through to customers, and regulators scrutinize acquisition premiums. "When a utility buys an existing generator, commissions will often disallow the acquisition premium unless you can show a clear ratepayer benefit," Foley said. This dynamic can steer utilities toward transmission, substations, and grid investments that support reliability and integrate future resources.
Keefe expects ownership to continue concentrating among large, well-capitalized participants. "We are expected to see power ownership continue to concentrate among large, well-capitalized participants that can assemble balanced portfolios delivering capacity with speed, certainty and durable cash flows," he said.
As AI-driven electricity demand outpaces the pace of new interconnection, existing generation is becoming more valuable—not simply because it produces power, but because it can deliver it years sooner.