[STRATEGIC] Power Generation · DOJ
Divestiture · Natural Gas / PJM —
ANNOUNCED March 18, 2026 — Closing later 2026
Constellation Sells $5B of PJM Gas Assets
to LS Power, Clearing the Path on its $26.6B Calpine Merger
The largest single-tranche DOJ divestiture in power sector
history: Constellation offloads 4.4 gigawatts of dispatchable gas-fired
capacity across five Delaware and Pennsylvania plants to LS Power — the price
of Constellation's dominance as the world's largest private-sector power
producer after closing the Calpine deal in January.
DEAL SNAPSHOT
|
TRANSACTION VALUE $5 Billion (before
closing adjustments) |
EXPECTED CLOSE Later 2026 (pending DOJ
+ FERC secondary review) |
|
IMPLIED PRICE ~$1,142/kW |
CAPACITY 4.4 GW — natural gas,
Delaware & Pennsylvania |
|
ANNOUNCED March 18, 2026 |
FACILITIES Bethlehem, York 1, York
2, Hay Road, Edge Moor |
THE PARTIES
|
ACQUIRER LS Power Equity Advisors
LLC New York-based
premier North American power and energy infrastructure investor. CEO Paul
Segal. Founded 1990; 50,000+ MW developed or acquired across 200+ projects.
Operates through LS Power Development (new generation and transmission), LS
Power Generation (22.4 GW operated portfolio), and LS Power Grid (7
transmission utilities, 780+ miles of HV transmission). Has raised $77B+ in
debt and equity capital for North American infrastructure. Just completed the
$13B sale of its own gas fleet and CPower demand response platform to NRG
Energy (January 2026), illustrating the firm's active portfolio recycling
strategy. |
SELLER Constellation Energy
Corporation (Nasdaq: CEG) Baltimore,
MD-based world's largest private-sector power producer. CEO Joe Dominguez.
Following the January 7, 2026 completion of its $26.6B Calpine acquisition,
Constellation controls 55+ GW of capacity — making it the largest nuclear
operator in the U.S. and a dominant competitive generation player. The DOJ
and FERC required a series of divestitures in the PJM market to maintain
competitive market structure. This $5B asset sale is the largest and most
substantive element of those required divestitures. |
THE REGULATORY BACKSTORY: CALPINE +
ANTITRUST
Constellation
announced its acquisition of Calpine — the nation's largest natural gas power
producer — in January 2025 for approximately $16.4 billion in equity value
($26.6B including debt). The combination created a power generation company
with no precedent in the private sector: 55+ GW of capacity spanning nuclear,
natural gas, renewables, and hydro.
Both the DOJ and
FERC identified specific competitive concerns in the PJM Interconnection market
(the Eastern U.S. grid serving 13 states and D.C.) where the combined
Constellation-Calpine would hold dominant capacity positions. Under the
December 2025 consent decree negotiated with the DOJ, Constellation agreed to
divest: (1) the Gregory Power Plant minority stake in Texas (completed earlier
in 2026); (2) the five PJM facilities announced on March 18 (the $5B LS Power
sale); and (3) the Jack Fusco Energy Center in Texas (still to be divested).
This March 18 announcement resolves the largest and most complex piece of the
antitrust puzzle.
"PJM is at the epicenter of the surge in electricity demand, and
these are exactly the kind of assets the grid needs — efficient, dispatchable
gas generation that can deliver reliable power around the clock. LS Power has
been developing, building and operating gas-fired generation for over 35
years."
— Paul Segal,
CEO, LS Power
MARKET CONTEXT: WHY $1,142/KW IS
SIGNIFICANT
The implied
acquisition price of $1,142 per kilowatt represents a significant premium to
the replacement cost of comparable gas-fired generation assets, reflecting the
surging value of dispatchable capacity in the AI-driven electricity demand
supercycle. Data center development (driven by AI training infrastructure) is
adding tens of gigawatts of around-the-clock power demand to the U.S. grid —
demand that intermittent renewables cannot reliably serve without firm backup
capacity. Dispatchable natural gas plants are the premium asset class in U.S.
power markets today.
ADVISORS
Sell-side
M&A Financial (Constellation): Barclays
+ SMBC/Jefferies
Sell-side
Legal (Constellation): Kirkland &
Ellis LLP
Buy-side
Financial (LS Power): Santander
Buy-side
Legal (LS Power): White & Case
LLP + Willkie Farr & Gallagher LLP