Energy Capital Partners will be acquiring U.S. power generator Calpine Corp. for $5.5 billion in cash. The deal is expected to be announced later this week. Calpine is a company that specializes in selling power to wholesale customers. This includes the different agricultural and industrial companies.
According to Bloomberg:
Calpine is one of the few publicly listed U.S. power generators still selling supplies directly into wholesale power markets. These companies have seen their margins squeezed by cheap natural gas, a surge in renewable energy resources and subsidies that some states have created for nuclear power. The rout has touched off a wave of consolidation with companies including FirstEnergy Corp. and American Electric Power Co. looking to get out of the business altogether.
It appears that Energy Capital believes electricity prices may rebound and make their investment worthwhile.
Is this a good investment for Energy Capital? What does the future of the non-renewable energy space look like?
