U.S. independent power producers are poised to benefit from unprecedented electricity demand as data centres, manufacturers and electrification reshape the sector. Long-term contracts, financial discipline and equipment shortages are preventing the overbuilding and bankruptcies of the past.
BNN Bloomberg spoke with Andrew Weisel, equity research analyst at Scotiabank, who outlined why Constellation Energy is his top pick, NRG Energy offers strong value, and Vistra and Talen Energy round out his coverage of large-cap power producers.
Key Takeaways
- Demand for electricity is at its strongest in decades, fuelled by data centres, manufacturers and broader electrification.
- A structural shift in the independent power producer model now allows investors to focus on upside growth rather than bankruptcy risk.
- Long-term purchase agreements provide 10–20 years of revenue security and financial visibility.
- Federal and state programs offer downside protection, while improved discipline prevents overbuilding of plants.
- NRG is viewed as the best value play, offering cheap valuation and significant optionality despite an inconsistent strategy.
Read the full transcript below:
A. BELL: Scotiabank has a bullish view on large-cap independent power producers in the United States. Strong balance sheets are one attraction, and the bank has added four names to its coverage. We’re joined by Andrew Weisel, equity research analyst in U.S. utilities and power. Andrew, thanks very much. First off, computing used to be measured in teraflops, but now we’re in an era where it’s measured in gigawatts — the actual power consumption from these centres.
A. WEISEL: That’s right. Thank you for having me. The magnitude really is mind-blowing. The scale of how much electricity is being consumed is far bigger than we’ve ever imagined, and it’s having a real impact on the utility sector overall. We need more electricity than we can possibly come up with in the near term. It’s a long-term, large-scale build.
A. BELL: Just look at OpenAI and Nvidia — the partnership they announced a few days ago will deploy 10 gigawatts of Nvidia systems. Is there simply not enough power in the U.S. to keep up with these huge building plans?
A. WEISEL: Not even close to keeping up with some of the plans being talked about now. The good news is none of this will happen overnight. Nobody expects it to. The other good news is the country has a good amount of electricity. The challenge is capacity — on the few days a year when it’s really hot or really cold. That’s where we run into shortages. That’s also where the power companies, especially the unregulated merchant power companies we just launched coverage on, can really benefit. Tech companies want guaranteed access to that capacity, not sometimes but 24/7. They’re willing to pay premium pricing and lock it in for 10, 15 or 20 years. IPPs have never seen that kind of demand before.
A. BELL: Ten gigawatts in this partnership with Nvidia and OpenAI — according to reports that’s about the amount of energy needed for all of New York City on a hot summer’s day.
A. WEISEL: To be clear, you’re not going to see one contract for that amount. There’s no 10-gigawatt power plant in the country. The biggest nuclear facilities are maybe two gigawatts. So it’s not like one company will build 10 gigawatts in one location overnight. But it shows the appetite for these plants. It’s a tricky balance for unregulated power companies, because they want some scarcity to boost the value of their existing fleet while also benefiting from growth. That’s very different from regulated utilities, which have to balance customers and regulators.
Merchant power companies have a rocky history — they used to overbuild when things were good, which led to bankruptcies. What’s different this time is more disciplined management teams, long-term contracts that support construction, and a shortage of gas turbines. You can’t just buy a combined-cycle gas plant off the shelf. There’s a five- to six-year backlog to build a new one. That creates inherent discipline in the market.
A. BELL: Let’s get into some ideas. Constellation Energy — we’ve heard a lot about it. They also have a nuclear angle. Why do you like CEG?
A. WEISEL: Some people say I’m coming to the game late. I disagree. This is a party that’s going to last a long time. Constellation is our top pick for the IPPs and for the utility space overall. They’re best positioned to benefit not only from the data centre trend but also from the broader electrification push. Manufacturers and other drivers are creating growth we haven’t seen before.
Why Constellation? They’re set to be the biggest IPP after closing an acquisition of Calpine. They have the largest nuclear fleet in the country. Tech companies want to decarbonize — maybe less urgently than a year ago, but it’s still important. Nuclear plants run 24/7, which matches the always-on demand from tech and manufacturers. Constellation has the strongest balance sheet and is the only investment-grade-rated IPP, which gives customers and investors peace of mind.
They’re also innovative — restarting a retired nuclear plant, investing heavily in upgrades to boost output, and already securing contracts with data centres. If I were a tech company, Constellation would be my first call. They won’t win every deal, but they’re the benchmark others will compete against.
A. BELL: Another name — NRG Energy. You say it’s a top pick for value.
A. WEISEL: NRG has a different mix than the others. A few years ago, they went heavily into the smart home business, which was unusual for an IPP. Now they’re getting back to basics, buying power plants from LS Power. All four IPPs are doing acquisitions, but NRG’s deal is more transformational. By 2026, I think all four companies will look more similar than different.
NRG trades at a big discount to peers. After these deals close, that discount should shrink. They also have a large retail book, which has already started winning data centre contracts. Their assets may not be the newest or the best, but I see strong value. Yes, it’s riskier than the others — but this is a risky sector. NRG is not a bankruptcy risk like some IPPs used to be, so I think the valuation gap will close.
A. BELL: We’re out of time, but quickly — Vistra and Talen. You call Vistra a high-quality, well-rounded operation, and Talen a solid player. Andrew, thanks very much.
A. WEISEL: Thanks for having me.
A. BELL: Andrew Weisel, equity research analyst covering U.S. utilities and power at Scotiabank.
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This BNN Bloomberg summary and transcript of the Sept. 25, 2025 interview with Andrew Weisel are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
