M&A in the energy sector is soaring as developers of AI projects look to bypass the growing practical and regulatory hurdles to launching new power generation projects.
The total value of global energy M&A reached an estimated $217 billion in Q2, growing 62% from the prior quarter and nearly fivefold year-over-year, according to PitchBook's latest Global M&A Report. That figure lands just shy of the $220.3 billion record for the energy sector set in Q4 2023.
Deal count shows a more modest growth, rising roughly 13% year-over-year to an estimated 409. North America alone accounted for 77% of total deal value, at $166.9 billion.
The momentum was propelled by a mega-trend: the need to meet explosive electricity demand driven by the breakneck expansion of AI data centers.
It's now the largest driver of M&A activity in this sector, if not the only one, said KPMG partner Stephen Binz.
"People are willing to pay a little bit higher today with the expectation that the value will grow and they can still make it on the other end," he said.
Building new generation plants, transmission lines and other power infrastructure from scratch is not only time-consuming but also requires extensive regulatory approvals—too slow to keep pace with AI's demand.
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The median time new power projects spent in the interconnection queue, as it is known, was 61 months in 2025, compared to 36 months in 2015, according to data from the University of California, Berkeley.
New power generation and storage facilities must undergo a series of studies before they can be built and connected to the grid, and projects invariably require upgrades or modifications before being given the green light.
M&A has emerged as a more practical workaround, giving power producers access to parts of the country where the data center buildout is most active.
The largest energy deal of the past quarter—the $67 billion all-stock merger between NextEra Energy and Dominion Energy announced in May—is a prime example of this trend.
The tie-up will create the largest utility company in the US, with 110 gigawatts of generation capacity—enough to power 11 New York Cities at once—and 10 million customer accounts across Florida, North Carolina, South Carolina and, most importantly, Virginia.
"Dominion owns all the transmission and grid over Virginia, which houses 'data center alley,'" said Benny Wong, a PitchBook analyst covering energy. "Buying it is NextEra's way of controlling that great infrastructure and better positioning itself to supply power for AI demand."