Vistra Makes AI Power Bet With $1.9 Billion Gas Plant Deal
(Bloomberg) -- Vistra Corp. agreed to buy seven natural gas-fired power plants for $1.9 billion, the latest big US generator betting on the fossil fuel to feed the voracious appetite of artificial intelligence.
The acquisition follows NRG Energy Inc.’s announcement Monday that it agreed to pay $12 billion, including debt, for a fleet of gas-fired plants from LS Power Equity Advisors LLC. In January, Constellation Energy Group Inc. said it would spend $16.4 billion for closely-held Calpine Corp., another large US operator of gas-fired plants.
Vistra rose as much as 5.6% before the start of regular trading in New York.
The value of power generators has taken off in the past year amid forecasts of soaring electricity use, primarily from energy-intensive data centers running AI applications. The anticipated demand has set off a race to acquire assets capable of meeting that need.
Under the deal announced Thursday with Lotus Infrastructure Partners, Vistra would amass an additional 2,600 megawatts of plants across five states, mostly in the Northeast. That’s the equivalent of about 2.5 nuclear reactors and will add to Vistra’s already considerable fleet of power generators that stretch from California to Maine.
Vistra is paying an “attractive” price for the power plants, according to analysts at Jefferies LLC. That may partly because they’re are older, with an average of 23 years in operation. Some are more than 30 years old. The NRG and Constellation deals may have also limited the pool of potential acquisition targets, Jefferies analysts led by Julien Dumoulin-Smith wrote in a research note.
Early last year, Vistra closed its $6.8 billion Energy Harbor deal to acquire a fleet of nuclear plants. In addition to nuclear, the company’s portfolio includes coal, solar and battery storage.
Investors have been cheering — and rewarding — shares of independent power producers as they announce big deals to take advantage of the data center boom, after years of bleak prospects and bankruptcies, said Paul Patterson, an analyst for Glenrock Associates LLC.
Shares of power producer NRG are up 72% so far this year. Constellation has climbed 27%. Vistra is up 10% this year.
“People are excited about AI, about data centers and they are excited to a degree about reshoring of industrialization in the United States,” Patterson said.
Vistra buying gas plants is in itself not a surprise and there likely will be more deals, Patterson said.
(Updates with share price in fourth paragraph.)
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