Scott Beicke, Americas Head of Power, Utilities & Infrastructure, and Georges Arbache, Managing Director, Power, Utilities & Infrastructure, shared their perspectives on the forces reshaping the sector at the Jefferies Energy & Power Summit 2026.
1. Demand Growth at a Scale the Grid Has Not Seen in Decades
After several decades of flat power consumption, the U.S. electricity market is entering a period of demand growth that is fundamentally changing the investment calculus across the sector. Projections across various sources point to a 2 to 2.5% compound annual growth rate in U.S. electricity demand — translating to 400 to 500 gigawatts of new capacity that will need to be built, with 75 to 200 gigawatts of that being firm capacity.
“Power has been taken for granted for a while,” said Beicke. “Of late, with the advent of AI-driven data center power demand growth, led in part by the hyperscalers, demand has started to take off — and that means we need more generation of all kinds.” Arbache pointed to Texas, data center alley in the Mid-Atlantic, and parts of the Mid-Continent as the most active build zones, with activity increasingly spreading across the country.
2. Gas Generation Is the Bridge
Both Beicke and Arbache were clear that meeting near-term baseload demand leaves little room for debate on fuel source. Hyperscalers and large data center operators need power on a 24/7 basis, and with new nuclear builds still many years away at scale, gas generation is the only reliable way to fill the gap. “Gas generation has been just white hot,” said Beicke, noting the sector shows no signs of cooling.
The financial case is equally compelling. New combined cycle plants now cost $2,500 to $3,000 per kilowatt to construct (two and a half to three times comparable costs five years ago), yet comparable operating assets have traded at around 50% of those replacement costs, suggesting further room to run on valuations. Long-term contracts with hyperscalers, who need to de-risk the economics of new builds, are providing the underwriting foundation for a new wave of gas generation investment.
3. The IPP of the Future Is Taking Shape Through M&A
The defining structural shift both executives identified is the emergence of what Beicke calls the “IPP of the future”: a fully integrated power platform combining gas generation, renewables, storage, and nuclear. “Today we have a lot of IPPs that are focused more on either the thermal side or the renewable side,” he said. “We believe the IPP of the future is going to see a combination of the legacy thermal IPPs and the legacy renewable IPPs come together.”
Arbache sees the renewables industry, still highly fragmented, as the piece that needs to consolidate first before it can serve as an effective merger partner for the larger thermal players. “We are very early days in the consolidation cycle,” he said, noting that most renewables platforms have historically been owned by control-oriented sponsors, making mergers of equals structurally complex. The first few transactions will be difficult, but once a track record of successful combinations is established, he expects momentum to accelerate significantly.
4. Affordability and Reliability Are the Sector’s Defining Constraints
Rapid capacity addition brings its own pressures. Both executives flagged affordability as an increasingly central concern, one that Washington is already beginning to act on. “We do not want the ratepayer to be burdened with the cost of funding and fueling those data centers,” said Arbache. Beicke was equally direct: “Affordability is going to play a key role,” he said, pointing to rising electricity bills as a political flashpoint that the sector will need to navigate carefully.
Reliability is the other constraint. Beicke warned that certain regions are closer to acute reliability events than the current level of public debate would suggest. “We’re adding a lot of capacity, but we’re adding a lot of demand,” he said. Transmission investment and storage deployment are the primary mitigants, but he expects reliability to become a more prominent issue across the sector over the next five years. On the interconnection side, Arbache pointed to the need for a far more streamlined process to allow new capacity to actually reach the grid at the pace the market requires.
5. Investors Are Returning and the Universe Is Expanding
M&A activity in the power sector is at an exceptional level, driven by a convergence of strategic and financial motivation. Power-focused private equity that accumulated assets through years of flat valuations is now monetising into a market where demand tailwinds have driven significant appreciation. Strategic IPPs — Constellation, Vistra, Talen, Capital Power — are deploying capital aggressively to grow in a sector that finally has the wind at its back.
Infrastructure funds, which pulled back during Covid under LP pressure around hydrocarbon investment, are returning with fresh capital and a clearer mandate. Arbache noted that the line of sight to demand growth from data centers has been decisive in bringing them back. Beicke expects the investor universe to continue widening: “Five years from now, there will be more investors in the space than there are today and today there are considerably more than there were five years ago.” Financing markets remain robust, supported by the hard asset nature of power infrastructure and the secular tailwinds underpinning collateral values.
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For more insights from Scott Beicke, Georges Arbache, and Jefferies, the leading advisor on M&A transactions in the energy sector, visit the firm’s dedicated thought leadership site.
