“There is a decent probability that we see some big deals in 2018,” said Wood, the Moelis & Co. investment banker.
South Carolina’s governor is working on the sale of the state-owned utility, Santee Cooper, after it and Scana abandoned work on the project. NRG Energy Inc. is expected to announce a deal as soon as this month to sell its wind and solar company NRG Yield Inc.
More Deals
“You are going to see a lot of generation assets trade hands” in 2018, said James Schaefer, senior managing director and head of energy, power and energy technology at Guggenheim Partners.
The investor-owned utilities probably will continue to merge as they grapple with sagging demand and aging power grids. Renewables like wind and solar are becoming a bigger share of the U.S. electricity supply, which means more investment and more competition with suppliers who use coal, nuclear power and natural gas.
At the same time, consumers will become more efficient in the future, limiting growth in power use, according to Bloomberg New Energy Finance. A measure of the amount of power needed to drive economic activity in the U.S. will drop 36 percent by 2040, as consumption rises at less than half the rate as the population, BNEF said in its 2017 outlook report. That assumes a big jump in demand for electric vehicles.
“In the end, you’ll have some more consolidation,” said James Torgerson, chief executive officer of Avangrid Inc., a Connecticut utility that was formed through a $3 billion merger in late 2015. “The things you have to invest in today, it just requires more capital access and bigger balance sheets.”
This article was provided by Bloomberg News.