The investment firms that took U.S. power plant operator Calpine Corp private six years ago are exploring options that include a company sale, an initial public offering or a stake divestment at a valuation of about $30 billion, including debt, according to people familiar with the matter.
The deal deliberations come as data centers powering artificial intelligence and extreme weather, such as heat waves driven by climate change, spur electricity demand in some of Calpine’s key markets, including Texas, where it operates 12 power plants.
Energy Capital Partners, Access Industries and CPP Investments, which acquired Calpine for $17 billion in 2018, are having early-stage talks with investment banks about their exit options, the sources said.
A transaction would likely happen late in 2024 or early in 2025, added the sources, who spoke on condition of anonymity to discuss confidential deliberations.
Calpine did not respond to a comment request. ECP, CPP and Access all declined comment.
An acquisition of Calpine would be the biggest in the U.S. power industry since TXU Corp’s $45 billion leveraged buyout in 2007. An IPO would likely be one of the largest ever of a U.S. power company.
Calpine owns 76 power plants generating almost 26,000 megawatts of power across 22 U.S. states, as well as Canada and Mexico, according to its website.
Calpine is an independent power producer and, unlike regulated utilities, it can sell power at market prices, allowing it to profit more when demand is up. The arrangement also exposes it to more power-market risk, however, because Calpine does not have a dedicated customer base as regulated utilities do. Its customers include businesses, industrial sites, as well as residential homes.
Having been stagnant for much of this century, aggregate U.S. power demand is expected to skyrocket further from the record 4,099 terawatts forecast for 2024 by the U.S. Energy Information Administration.
While precise forecasts vary, Goldman Sachs said last month that U.S. power demand could reach 5,036 terawatts by 2030.
Investors are scrambling to place bets in the sector, due to this outlook.
So far this year, Vistra Corp’s stock has jumped 139%, while shares of competitors Constellation Energy and NRG Energy have surged 81% and 58% respectively. This compares with the 12% gain in the S&P utilities index, and a 9% increase by the S&P 500.
