The One Big Beautiful Bill Act (OBBBA) has redrawn the U.S. energy sector map. By scaling back clean energy tax credits and easing regulations on fossil fuels, the act has simultaneously cooled renewable investment and reignited traditional energy expansion. For dealmakers in the energy industry, this has created both headwinds and new openings, especially in mergers and acquisitions (M&A).
COMMENTARY
This is evident on Datasite, which annually facilitates about 19,000 new deals. New global energy deals on the virtual data room provider’s platform dropped 20% year-over-year in the third quarter. Yet the pullback reflects a bifurcation of the market where investment in renewables is slowing, and demand for fossil assets is rising.
Oil and gas deal activity has accelerated, fueled by new incentives and deregulation. A KPMG analysis shows that renewable asset transactions made up just under 30% of U.S. power-sector M&A value by midyear. In contrast, oil and gas deals accounted for more than 45%. Additionally, U.S. coal is expected to rise 7% in 2025 compared with last year, marking the first annual increase since 2021. Coal-fired and gas-fired electricity generation are also expected to increase. Domestic oil production has also hit record highs earlier this year, with domestic crude expected to average above 13.5 million barrels per day by year-end.
These numbers reflect strong demand from power-hungry data centers and industrial growth zones. They also underscore the OBBBA’s central goal of reestablishing fossil fuels as the foundation of US energy dominance. The act has tilted the playing field toward traditional energy sources, such as oil, gas, and coal, which are now enjoying a fresh wave of incentives and deregulation.
No More Solar or Wind Incentives
The OBBBA rolled back many of the production and investment tax credits for solar and wind, tightened foreign ownership rules, and set new deadlines that make it harder for developers to qualify for federal subsidies, including cutting off credits for projects that don’t begin construction by mid-2026 and finish by 2028.
With the loss of subsidies and tighter credit windows, smaller developers are struggling to stay afloat. Many are choosing to merge or sell to infrastructure funds, utilities, and oil majors pivoting into select zero-carbon niches, in a wave of consolidation
Deal Structure and Strategy: Adapting to the New Normal
OBBBA policies are also reshaping how energy deals are structured. The expansion of interest deduction provisions has led acquirers to embrace leverage more aggressively. Meanwhile, tighter restrictions on foreign investment are reducing the pool of potential bidders, making deal competition more selective.
Industry Impact: Renewables Mature, Fossil Fuels Surge
Yet, renewables are not vanishing, but they are evolving within a market where operational scale and efficiency outweigh policy-driven growth. Wind and solar energy providers that adapt their capital models to focus on market discipline, rather than subsidized credit, will be best positioned for survival.
Conversely, traditional energy sectors, especially oil and gas, could experience record-breaking M&A volumes through 2026, as deregulation and tax incentives restore investor confidence.
For energy M&A leaders, now is the time to strategically align tools, data, and relationships to capitalize on the next wave of industry consolidation. Companies that are prepared and ‘deal ready’ stand to benefit most from the ongoing shifts in the energy marketplace.
—Dan Phelan is Senior Sales Vice President, Southwest, at Datasite.
