Power M&A should be renamed gas M&A. Since October 2024, U.S. gas plant deals have carried about $81 billion of disclosed value, more than three times wind, solar and storage combined. It is not hard to understand why. Data center loads prize reliability and new-build generation is coming in at more than double existing assets are fetching in M&A markets. No wonder a panelist on an M&A panel I recently sat on called buying existing gas generation a “no-regrets” decision.
The list of available assets is shrinking fast. That scarcity explains the attention on portfolios like Milepost. We value the portfolio at $2.74 billion, or $0.66 million/MW for its 16 operating plants. That average is deceiving. Four core plants average about $0.88 million/MW, in line with recent deals. About 1.8 GW of older peakers sit at $0.2 to $0.5 million/MW. Clients can see our full model in the Milepost Power report.
Bastrop shows the build side of that math. Milepost plans a 1,104 MW expansion of the Texas facility there with turbines moved from Elwood, which sidesteps the turbine backlog. Even so, we value the expansion at $68 million to negative $424 million. Even with generators in hand, it is hard to add meaningful value in our model.
Where value really shows up is with plants rewarded for their reliability attribute. Capacity pays 31% of Milepost’s 2027 revenue and nearly half at its two PJM plants, Tait and Lee County, which hold $945 million of our valuation.
Dependence on PJM’s capacity markets puts a special emphasis on their outlook. PJM’s last two capacity auctions cleared at the cap and short of the reliability requirement by 6.6 GW and 6.8 GW. Its first backstop procurement closes October 21, with contracts of up to 15 years at up to $555/MW-day. We have urged caution: a backstop sized near 12 GW of accredited capacity against auction shortfalls under 7 GW could cut capacity prices by up to 29%.
Our forecast takes PJM from the $325/MW-day collar to $217 in 2030/31, which halves Tait and Lee County EBITDA.
You would expect batteries to race into a market with PJM’s economics. A four-hour battery earns about $70/kW-year from capacity alone. Yet PJM runs 1 GW of batteries against 20 GW in ERCOT. Even the fastest assets to build struggle to get onto PJM’s grid.
The holdup is PJM’s interconnection queue, which stopped taking new requests for years while it cleared a backlog. It reopened this spring, putting new supply back in line, and the first cycle drew about 236 GW, led by 109 GW of gas and 77 GW of batteries. Projects already holding agreements could add 8 to 9 GW of accredited capacity from 2028 to 2031, more than either recent auction shortfall and squarely in our capacity price trough. Bet too big on those prices and even gas could leave you with regrets.
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