Carlyle to sell US Power Plant Giant to Quantum Capital for $3 billion

Global investment firm The Carlyle Group has agreed to sell Cogentrix Energy, the owner of more than a dozen power plants in the US, to private equity group Quantum Capital for $3 billion, the Financial Times reports.

Carlyle bought the North American power generation assets held by Cogentrix Energy from Goldman Sachs Group in 2012.

Earlier this year, the FT reported that Carlyle had hired investment bank Lazard and law firm Latham & Watkins to advise the group on a potential sale of Cogentrix. A deal could value the energy group at up to $4 billion, three sources told the FT in June.

The utility sector is bracing for a wave of mergers with in-demand power-generating assets as US electricity consumption is set to grow in the coming years thanks to artificial intelligence-based technologies.

The current surge in electricity demand is in stark contrast to a decade of U.S. consumerism.

U.S. energy demand is “likely to see growth not seen in a generation,” according to a Goldman Sachs report earlier this year.

America’s electricity demand will grow by about 2.4 percent each year through 2030, and about 0.9 percentage points of that figure will be related to data centers, Goldman Sachs Research estimates.

This compares with zero growth in US energy demand in the decade to 2023.

Goldman Sachs expects data centers to use 8% of US energy consumption by 2030, compared to 3% in 2022. Data center energy demand will grow 160% by 2030 – and will be driven by AI, said the investment bank.

Although technology firms tend to favor renewable energies to power their data centers, solar and wind capacity may not be deployed quickly enough to power the new computing demand.

So natural gas could also be a winner in growing AI-driven energy demand in the U.S. While many tech companies prefer to power their AI development centers with solar and wind power, the need to quickly build and power these data centers would increase demand. and for natural gas, analysts say.

By Tsvetana Paraskova for Oilprice.com

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