2012 Power Capacity Purchases Dominated by Merger and Acquisition Activity

More than 107 GW of operating capacity in the U.S. electric power market were bought and sold over 2012, mostly as a result of three large mergers or acquisitions, the Energy Information Administration (EIA) found in an analysis of power plant capacity purchases released on Wednesday.

The purchased power capacity compares with about 26 GW of capacity additions from newly constructed plants, the EIA says. Purchases were spearheaded by mergers between Duke Energy and Progress Energy (which closed on July 2, 2012), Exelon Corp. and Constellation Energy Group (closed on Mar. 12, 2012), and the acquisition of GenOn Energy by NRG Energy (closed on Dec. 14, 2012).

Most of the purchased generating capacity in 2012 was fired by natural gas or consisted of renewable units. Gas and renewable fuel sources constituted a majority of the generating capacity bought or sold since 2005, the EIA says.

Among other major power capacity deals conducted in 2012 was the acquisition of three coal-fired power plants from Exelon for $400 million by Raven Power Holdings, a Riverstone Holdings company. The third quarter of 2012 showed the highest level of deal activity, with transactions worth more than $50 million, since the third quarter of 2011 as "companies look to scale operations to drive revenue," said Jeremy Fago, PricewaterhouseCoopers’ U.S. Power and Utilities Valuation Services leader. "Consistent with our earlier reports, we continue to see increased generation asset activity, both fossil and renewable."

Sources: POWERnews, EIA, PWC

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