Data center demand boosts global private equity investments in utilities

Global private equity and venture capital investments in the utilities sector soared more than 50% year over year to $69.52 billion in 2025, according to S&P Global Market Intelligence.

The momentum continued into the first quarter of 2026, with investments nearly hitting the total for all of last year at $64.59 billion.

The utilities sector in this report comprises energy utilities, water utilities, gas utilities, multi-utilities, independent power producers and renewable electricity providers.

Rising energy demand to power data centers is driving investments in the utilities sector, according to Gregory Brown, professor at the University of North Carolina Kenan-Flagler Business School and founder and research director of the Institute of Private Capital.

Global power demand from data centers is estimated to increase from 860 terawatt-hour (TWh) in 2025 to 1,587 TWh by 2030, according to 451 Research, part of S&P Global, driven by rapid growth in data centers in the US and Europe.

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Regulated vs. unregulated

Investment in the US and Canada utilities sector stood at $53.49 billion in 2025, accounting for 76.9% of total industry investment value last year. Investments in Europe came in at $10.6 billion.

The unregulated side of the market, which includes independent power producers, drove investment growth last year, according to Jeff Smith, director of the energy and utilities practice at consultancy West Monroe Partners LLC. Regulated, publicly traded investor-owned utilities are also fueling growth as private equity firms move to help finance and structure the massive generation and grid investments needed to serve rapidly rising power demand from data centers and hyperscale operators, Smith said.

Total deal value for independent power producers and energy traders was $3.44 billion in 2025, making it the fourth-most-invested sub-sector overall, while the top sub-sector was electric utilities at $31.66 billion.

Smith said regulators are increasingly asking utility companies to put data center projects into separate contracts so that ratepayers do not end up bearing most of the costs and risks of serving hyperscalers. Such requirements will likely push utilities to move those contracts and related assets into dedicated special-purpose entities, creating separate businesses that private equity can more easily help finance, he added.

Top deals

One deal that illustrates this trend is Blackstone Inc.'s $11.94 billion acquisition of New York–listed TXNM Energy Inc., which was the second-largest utilities deal of 2025.

The largest deal of 2025 was the $19.49 billion acquisition of Sempra Infrastructure Partners LPby KKR & Co. Inc. and the Canada Pension Plan Investment Board.

Beyond growing data center demand, Brown sees sustained disruption in global energy markets as another tailwind for investment in the utilities sector. Continued volatility and geopolitical risk are pushing companies and countries to invest more in domestic energy capacity as a hedge against unreliable imports, he added.