Nrg Buying Ls Power Gas-Fired Plants In $12-Billion Deal

NRG Energy announced it would acquire 18 natural gas-fired power plants with 13 GW of generation capacity as part of a $12-billion cash-and-stock deal with LS Power.

Houston, Texas-based NRG on May 12 said the deal, expected to close in the first quarter of 2026, would double the group’s overall generation capacity portfolio to 25 GW. The gas-fired plants are located across nine states, including Texas and in the U.S. Northeast. The company’s stock price rose more than 25% after news of the acquisition, along with the utility reporting a 16% jump in revenue from the year-earlier quarter.

LS Power, headquartered in New York City, is an energy infrastructure investment firm. NRG CEO Larry Cohen said the deal is driven by the expected rise in demand for electricity from industrial customers, including data centers.

The deal is the latest for NRG as the company looks to capitalize on growth in power demand. NRG acquired 738 MW of gas-fired assets from Texas-based Rockland Capital in March; the deal was for one combined-cycle unit and five peaker units. NRG signed power supply deals with two data center developers earlier this year, and the utility also has said it is working with GE Vernova to develop as much as 5.4 GW of new natural gas-fired generation capacity.

“We are in the early stages of a power demand supercycle,” said Cohen. The utility said the acquired assets also would include CPower, a commercial and industrial virtual power plant (VPP) platform. VPPs integrate multiple energy resources to provide additional power for the grid.

The companies said NRG will pay $6.4 billion of the deal in cash, and $2.8 billion in stocks, to LS Power. NRG also will assume $3.2 billion of net debt at the close of the deal.

“This acquisition transforms NRG’s generation fleet and broadens our customized product offerings, enhancing our ability to bring the future of energy to millions of customers across the U.S.,” said Cohen. “The transaction is financially compelling as it strengthens our credit profile and turbocharges NRG’s growth rate, while also supporting continued robust capital returns. We are in the early stages of a power demand supercycle, and we are excited to lead the way with reliable energy solutions that will drive considerable value for NRG and all of our stakeholders.”

Paul DeCotis, senior partner and head of East Coast energy and utilities at West Monroe, a global business and technology consulting firm, told POWER the “acquisition is forward-looking but not without some risk.” DeCotis said, “NRG is betting on an increased need for flexible power generation with fast start times, to follow loads, as the industry looks to meet growing electricity demand across the country. Providing firm power from gas generation to balance system needs with increasingly more intermittent resources is critical.”

DeCotis noted that “The recent power outages in Spain caused by instabilities in the electric grid can be prevented with more stable fast start and load-following generation,” a situation that has resonated with U.S. electric utilities. DeCotis added that along with the deal significantly increasing NRG’s overall generation capacity portfolio, it also gives the company “market access to nine states and [is] expanding NRG’s reach into wholesale electricity markets nationwide.”

“This transaction is a significant milestone for our firm and investors,” said Paul Segal, CEO of LS Power. “Over time, LS Power has carefully assembled, expanded, redeveloped, repositioned, and operated this generation portfolio, which is uniquely situated to meet the growing energy demand in the markets it serves. In the capable hands of the NRG team, these projects, along with CPower, will continue to provide critical services to the grid, enhancing both its resilience and affordability. As we have since our founding in 1990, LS Power will continue to invest in and develop secure and reliable energy infrastructure across the U.S.”

Vanessa Akhtar, managing director of Kotter, a consulting group focused on how industries can adapt to change, told POWER, “Executives across the utilities sector have been focusing more and more on how to meet unprecedented, anticipated load growth. For many, it seems overwhelming and almost unsolvable. And, in reality, it may be unsolvable through internally driven infrastructure growth strategies alone.

“This deal puts a stake in the ground about NRG’s belief that this anticipated load growth is not just talk—it’s coming,” said Akhtar. “M+A [merger and acquisition] activity has been significantly higher over the last year than in previous years, but there haven’t been many at this scale. This deal could trigger other utilities to think about the value of acquiring large infrastructure assets as a critical strategy for managing the anticipated load growth [largely driven by data centers].

“Uncertainty has started to spike well above the levels we saw at the start of the Covid-19 pandemic,” said Akhtar. “However, the utility sector—while facing continued disruption—has been somewhat insulated from the most severe impacts of this uncertainty. For example, many utilities are less directly impacted by federal funding freezes or tariffs. This creates a very real opportunity for the sector, before they are directly impacted by spiking uncertainty. Use this moment in time to lean into appropriate risk taking and proactivity to get ahead of anticipated challenges. Now is the time to decide if and how you might set the pace for the rest of the industry.”

LS Power, which itself has been acquiring natural gas assets, said it would keep about 10 GW of power generation capacity across natural gas, renewables, and energy storage projects. The company also said it would keep its LS Power Grid (LSPG) platform. LSPG, which represents the company’s competitive transmission business, has more than 780 miles of high-voltage transmission lines in operation and another 350-plus miles currently under construction or development, representing a combined capital investment of more than $6 billion.

“NRG is betting on a robust near- to intermediate-term boom for gas-power generation while LS Power is looking to strategically align its business to the fast-growing need for transmission, storage, and other cleaner energy resources,” said DeCotis. “While natural gas use and gas-powered generation are at risk in some parts of the country as states look to decarbonize their economies, industry experts know that natural gas is not going away anytime soon, and it does provide decarbonization benefits compared to oil and coal.”

LS Power last summer reached an agreement with Algonquin Power & Utilities Corp. to acquire that company’s renewable energy business, which includes mostly wind and solar assets located throughout the U.S. and Canada. LS Power in announcing that deal in August 2024 said it includes 44 operating assets with more than 3,000 MW of generating capacity, along with an 8,000 MW pipeline of wind, solar, battery energy storage, and renewable natural gas projects.

—Darrell Proctor is a senior editor for POWER.