By Lou Sokolovskiy
In the evolving corridors of American finance, a transformation is quietly remapping the terrain of mergers and acquisitions (M&A). At the center of this shift lies the country’s accelerating clean energy push—one that is reshaping dealmaking in the lower and middle markets, sectors traditionally eclipsed by their multibillion-dollar counterparts. From Washington incentives to rising industrial demand, the conditions are aligning for what many analysts believe could be a generational reordering of energy investments.
A Federal Tailwind
Central to the momentum is the Inflation Reduction Act, which earmarks $27 billion for the Greenhouse Gas Reduction Fund and is projected to bring online 600 gigawatts of new solar, wind, and energy storage capacity within five years. That scale of development has prompted renewed interest from investors seeking consolidation opportunities across the fragmented clean energy space.
“The ongoing push for clean energy is a major catalyst in M&A activity,” said Wilhelm Liebmann, director of the corporate finance practice at Dykema, in a recent company post. “The surge is being driven by federal incentives and stricter environmental regulations.”
That enthusiasm appears to be reaching beyond top-tier players.
Ripples From the Top
Recent megadeals have set the tone. Among them: CDPQ’s $10 billion acquisition of Innergex and Constellation Energy’s $16.4 billion buyout of Calpine Corporation. These transactions reflect an appetite for renewable infrastructure that experts expect to cascade into the lower and middle markets.
A landmark 2024 agreement between Microsoft and Brookfield—covering more than 10.5 GW of renewable capacity—alongside a joint venture between CATL and Masdar involving 5.2 GW of solar and 19 GWh of storage in Abu Dhabi, signal not only demand at scale but also a new pace of activity around the world. M&A volume in the energy storage sector alone has nearly doubled from 2023 to 2024.
That trickle-down is now visible in the lower and middle markets— defined by transactions involving companies valued under $1 billion. Analysts at FTI Consulting point to a looming wave of “significant consolidation” in renewables and thermal generation, as small developers with tight margins or limited financing become ripe for acquisition.
Still, structural headwinds remain. Supply chain disruptions, particularly around electrical components, continue to slow timelines and inflate costs—posing challenges for smaller firms. Market dislocation, driven by inflationary pressure and interest rate uncertainty, has also made capital harder to access for companies without deep reserves.
For those interested in how these pressures are playing out in other sectors, our colleague Bill Bowler offers a compelling analysis of distress dynamics in the Aerospace and Defense industry—a timely and insightful read amid broader market uncertainty.
“Fortune Will Favor the Bold”
Despite the friction, firms with cash on hand and a willingness to move early may find themselves best positioned to benefit.
“Fortune will favor the bold,” FTI Consulting wrote in a March report. “Well-capitalized firms that have comparatively lower costs of capital and a willingness to move out on the risk spectrum will be well-positioned to benefit from opportunities arising from macroeconomic turbulence and market dislocation.”
Much of that opportunity is linked to technology-driven industries. Data centers—supercharged by artificial intelligence—are projected to require an additional 35 GW of power by 2030. Direct air capture (DAC) technologies could demand a further 2.7 GW. That surge is reinforcing clean energy’s status as not just an environmental imperative, but a commercial one.
Investment at Speed
In the third quarter of 2024, cleantech investment surged to $71 billion, with 60% of that allocated to projects set to begin within four years. In the first half of 2025, according to PwC, U.S. power-sector M&A activity continued its strong performance, with deal values increasing by approximately 30% compared to the first half of the previous year.
When it comes to renewable energy, M&A deals in North America totaled nearly $13 billion in Q1 2025—accounting for more than one-third of global deal value. The figures reflect a market racing to meet escalating demand and rapidly scale infrastructure.
While these figures largely highlight activity at the top end, they will no doubt have profound implications for the lower and middle markets. These sectors—often viewed as bellwethers of broader health—are expected to mirror top-tier momentum, as investors seek undervalued assets and strategic scale.
Looking Ahead
As the clean energy transition accelerates, the coming year could be a defining one for M&A in the sector—especially for players outside the mega-cap limelight. With billions in government support, rising demand from power-hungry industries, and a wave of investor enthusiasm, the conditions are set for a reshaping of the lower and middle market M&A landscape.
In an industry where volatility is often the norm, one thing seems clear: in a foreseeable future, clean energy will not just be part of the M&A conversation—it will likely be the headline.
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Aug. 2025
