Capital requirements have surged across the renewables and power sector, spurring M&A activity including sales and capital raises, according to Todd Bright, partner in leadership for Partners Group’s infrastructure business.

“There are probably hundreds of developers that are actively either seeking capital, selling projects, or looking for new funding sponsors and partners,” Bright said on Infralogic’s Crossroads podcast.

Bright drew parallels to the shale revolution, during which independent E&P firms raced to accumulate acreage and prove up resources in hopes of selling to larger companies. When oil majors became more selective and exit opportunities failed to materialize, some smaller E&Ps found themselves needing more capital than expected to hold their acreage, Bright said.

“I think we’re seeing the exact same inflection point in renewables right now, where developers face the same choice between selling their projects and recycling that capital at distressed prices or holding those projects and developing them deeper into the buildout and lifecycle of the project,” Bright noted. “The IPP model is really undergoing a structural separation between scale platforms that have good sponsors, have their own balance sheet, and can fund the buildout of their pipelines themselves [and] the ones that need to recycle projects in order to keep growing or need to get bought.”

On the other hand, Bright stressed that the growing demand for power spurred largely by the AI revolution would require investment in a range of generation technologies.

“I’ve been in the power industry for … 35 years in some form or another and I’ve never seen anything like what we’re seeing on the demand side,” Bright said. “This is not a kind of tweak to the model. This is a structural step change in US electricity demand, the likes of which we haven’t really seen since the post-World War II era.”

To listen to the podcast, click here.