CASE STUDY — May 15, 2025
A Professional Services Firm Leverages Power Evaluator to Hone Its Plant Valuations
THE CLIENT:
A large professional services firm
USERS:
The U.S. power M&A team
M&A showed signs of reviving in 2024, and the drivers are in place to help further accelerate activity in 2025. In the power sector, the growing demand for datacenters fueled by the rapid growth of AI, coupled with the ongoing energy transition, should help spur M&A activity.
Much attention has centered on datacenter electricity demand. However, as datacenter capacity underpins a larger share of economic activity, it will contribute to reshaping historical patterns of electricity consumption throughout the broader economy.[1] While new datacenters present significant growth opportunities for utilities, uncertainty over their scale, timing and location bring risks, and opinions vary on how far and how fast datacenter power consumption will grow.
The U.S. power M&A team at this large professional services firm is charged with valuing U.S.-based assets of interest to its clients. Uncertainty surrounding energy transition strategies, datacenter load forecasts and the implications for electricity consumption elsewhere in the economy has made this task extremely difficult. Members of the team wanted to identify a third-party firm with deep knowledge of the energy sector and the many issues that could impact the value of power plants.
AI and energy: The big picture", S&P Global Market Intelligence, December 4, 2024, www.spglobal.com/en/research-insights/special-reports/look-forward/ai-and-energy.
Pain Points
The M&A team was finding it difficult to get a clear picture of the outlook for U.S.-based power plants given the number of issues that need to be considered to truly understand the long-term value of a plant. For example, assumptions about electricity prices, climate change risks and drivers of demand can all affect the accuracy of a valuation. Members of the team wanted to draw on the expertise of a third-party firm knowledgeable about these issues and offered an intuitive platform that would enable them to use a transparent and easily understood methodology to:
- Simulate potential plant acquisition and divestment opportunities to understand how choices could play out financially.
- See how multiple forecasting scenarios with differing assumptions on markets, policy and technology can impact a valuation.
- Integrate weather data, forecasting information and nodal portfolio pricing to create reliable projections of future project value.
- Rank a plant against key net-zero categories.
- Screen for power projects, portfolios and companies to understand market activity and peer group performance.
The team contacted S&P Global Market Intelligence ("Market Intelligence") to learn more about the firm's offerings.
The Solution
Market Intelligence specialists described Power Evaluator, a power plant valuation suite available on S&P Capital IQ Pro, a robust desktop solution. Power Evaluator brings together billions of data points from across S&P Global's premium power plant, financial and climate risk datasets to deliver essential insights on power deals. Using best-in-class asset-level data, 40,000+ machine-learning-powered nodal forecasts and physical risk metrics, it delivers reliable power valuations. Built with multiple power forecasting scenarios and adjustable financial assumptions, Power Evaluator would give the M&A team the ability to:
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Simulate mergers, acquisitions or divestitures of any plant or portfolio |
Power Plant Asset Finder lets users screen for any power plant across the U.S. and display and shade assets using 100+ metrics, from capture price to asset value to wildfire exposure. Users can then prepare a custom portfolio of assets for analysis, combining companies, fleets or individual assets. |
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Quickly perfom power plant valuations |
A valuation dashboard and workbenches let users compare plant valuations using multiple forecasting scenarios and 40,000+ machine-learning-powered nodal forecasts. The analysis can be customized with 30+ adjustable financial assumptions, and users can download pricing curves and a complete pro forma of their portfolio. They can also quantify the impact of physical risks on a portfolio or asset. |
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Assess the viability of projects |
The Asset Builder seamlessly integrates weather data, forecasting information and nodal pricing within a sophisticated tool tailored to deliver accurate projections of the future value of a project. |
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Understand forward prices of power markets and power plants |
Power price forecasts on S&P Capital IQ Pro enable clients to value assets with 20-year power-forward curves projecting electricity prices and renewable energy credit (REC) forecasts drilled down to the hourly level, supported with research insights. |
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Consider net-zero goals of a plant |
Net-Zero Benchmarks enable users to rank a plant or power portfolio score against three key net-zero categories: reliability, cost-effectiveness and cleanliness. Editable weightings let users customize scores to match their strategic priorities. |
Key Benefits
Members of the M&A team saw that Power Evaluator delivers unique and advanced forecasting capabilities to mitigate the risk of power price fluctuations in power plant valuations. They were impressed with the 30+ years of combined power pricing experience of S&P Global Market Intelligence, S&P Global Commodity Insights and IHS Markit and subscribed to the solution. This has enabled them to save time, reduce costs and feel confident in their valuations. They can now:
- Quickly understand the fuels and technologies that are in demand and which projects are viable.
- Deploy diverse forecasting scenarios to gain valuable insights into the potential fluctuations of projects.
- Work with existing plants or hypothetical new builds.
- Use screening tools to identify similar transactions to help fine-tune valuations.
- Assess eight climate risk indicators: extreme heat, extreme cold, fluvial flood, drought, tropical cyclone, wildfire, water stress and coastal flooding.
Since numerous valuations can be completed simultaneously with Power Evaluator, they are also able to take on more client assignments than in the past.
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