Join CIBC’s Energy Shift hosts, James Wright and Ines Serrao, as they welcome special guest, James Brooks, for an insightful recap of 2025’s most notable developments and compelling data highlights within a rapidly evolving energy sector. The conversation then turns forward, as the trio shares their perspectives and predictions for what’s on the horizon in 2026.
Intro: Welcome to The Energy Shift, a podcast series focusing on the rapidly evolving energy landscape with hosts Ines Serrao and James Wright.
James Wright
Okay, good morning Ines. Happy New Year. I'm never too sure. Can we still say that in second week of January? What's the protocol here?
Ines Serrao
Absolutely. Happy New Year, James.
James Wright
Okay, so to get us into 2026 on today's pod, we're to have a bit of a different flavor. We're going to recap a few of the notable developments from 2025 and some interesting data points we saw in our markets there. And then just take a look ahead on what we're all thinking about for 2026. And we do have a mystery guest on with us today who we'll introduce in a second who's been very patient. to get into it, mean, 2025 from my perspective was a truly exciting year for project finance. You the standout themes were undoubtedly digital infrastructure and power. These sectors have been driving record market volumes the past three years, and there's really no sign of that slowing down. Coming into a close second, I'd say would be the resurgent LNG market with more mega-financings in that space, which we'll probably get into a bit later as well. And then to put all that into perspective, IJ Global reported US project finance volumes in 2025 were 330 billion by Q3 and unpublished reports have put the total year number at more than 400 billion, which is quite remarkable when you think it was about 185 billion in 2023 and 295 billion in 2024. So that's nearly doubling your volumes in the past two years.
So if you put that in perspective again, not only were we seeing record volumes, but deal sizes are also growing. If we go back 10 years, the largest PF deal in 2015 was the Chenier Corpus Christi LNG deal. That was about four and a half billion of debt financing on a total deal size of 11.5 billion. And then this past year, the largest PF deal was the Meta Blue Owl Hyperion data center deal, which was 27 billion in total project financing against a deal size of 35 billion. That's seven times as large, which is kind of remarkable. So that was a lot of data points to get us into what's your take on that?
Ines Serrao
Thanks, James. I definitely agree with you that 2025 was a very exciting year for Project Finance. And obviously, I'm biased. And it's interesting, as you just mentioned, Corporates Christie, the memories from doing the early original LNG deals are quite interesting. And I want to dig deep in a few of the topics you mentioned at the start of the podcast. So digital infra is clearly at the core of a lot of these themes. And the advancements in AI and cloud-driven data have been and will continue to dramatically increase the power demand. This is the first significant growth in power demand we've seen in a generation. ICF reported that US electricity demand is expected to grow 25 % by 2032 and 78 % by 2050 from 2023 levels. Also, over the last year, we've seen a true symbiosis between the ambitions of the tech sector and its reliance on delivery from the power industry. A good example here would be the announcement last month from Alphabet, Google's parent, of an agreement to acquire Intersect Power, a sizable renewable energy developer for $5 billion, to provide Google with data center and energy infrastructure solutions.
And with all of this, the power market is embracing an all of the above power strategy to meet the demand which continues to drive the need for substantial volumes of new power projects. And so in 2025, the renewable sector still leads the new builds, but gas is expected to play a much larger role in the coming years, especially as supply chains adjust and the permitting process gets reformed. And nuclear, which shouldn't come as a surprise, is also at the forefront of the conversation as we discussed a couple of weeks ago on this podcast with Stephen Comello, albeit across a much longer development timetable. As you were also saying, the special mention goes to the LNG sector, with six US projects reaching FID, or financial investment decision, in 2025. That represents 72 billion of investment driven by international demand from US allies and geopolitical tensions, causing energy disruption abroad and setting a new record for the sector. The other point I think is worth mentioning is that the growth of these deals has put pressure on various parts of the financing ecosystem. There are human resources constraints on specialized supply chain personnel, such as construction crews, service providers like consultant engineers, and dare I say it, even the poor old project finance bankers like us.
Supply chains have been feeling the heat as well. And back orders for gas turbines are as long as seven years. Prices are increasing due to these constraints and layer on top of all of that, the tariff impacts, which above all else, add a layer of uncertainty and risk that's hard to price. Ultimately, what this will cause is impacting the economics of the project.
And that gets addressed through increasing contract pricing and creating higher costs of electricity globally. That will be further driven higher by the data center energy demand that we mentioned earlier. And all of that leads to greater risks, which means that bankers want to see sponsors with deep pockets supporting this growth stage. So evidently, the value of any power that can be built in the next decade is very high.
And this is equally the same for operating assets. Valuations have been high, particularly for relatively young CCGT fleets at advantage locations with good access to feedstock. And I'll pause here because I know I threw a lot at you.
James Wright
Well, that was a great lead in this and a ton for us to kind of get into with our guest actually, who's been patiently sitting here listening to us rambling on. So I'll bring him in. We have on the pop this today, James Brooks, who is our global co-head of energy, infrastructure and transition investment banking. James, welcome. Great to have you on.
James Brooks
Thanks, James and Ines, long time listener, first time caller here. In all seriousness, I've really enjoyed the podcast and appreciate the invitation to join the session today. For background, for some of the listeners, I have the pleasure of leading our investment banking practice globally across the energy and infrastructure spectrum. So that is everything from oil and gas to midstream utilities, renewables, conventional power and the infrastructure square. So looking forward to the conversation today.
James Wright
That's excellent, thanks James. And this could get confusing with two Jameses, but I think one of us has a discernible British accent and one slightly more Canadian. So we'll be able to navigate this, okay. All right, so let's get into it James with you then. So we kicked off there with a bunch of interesting data points on some of the thematics that were driving the PF side of the ledger this past year and how that's maybe feeding into this year. Could you share some thoughts on what you saw in the M&A space last year. Was it similar thematics or different drivers from your perspective?
James Brooks
Yes, so North American energy M&A in 2025 was particularly strong after what I would say was a slow start to the market as folks adjusted to the new administration in Washington. But capital is definitely picking up on the activity side and clearly picking some winners, I would say, in this market. For example, in gas fire generation, we saw 63 gigawatts of capacity transact across 32 transactions in 2025. And that was more than a double the level of activity that we saw in 2024 where we saw 28 gigawatts of capacity transact over 26 transactions. And we saw the year bring a number of flagship conventional generation transactions, Constellations $26 billion acquisition of Calpine, NRG's $12 billion acquisition of a portfolio from LS Power, and a number of other significant transactions completed by folks like Capital Power and Vistra and Talon, ArcLight, ECP, just to name a few. And those transactions underscored the importance of firm dispatchable generation, as well as operating scale in the face of accelerating demand fueled by AI related infrastructure. And those tailwinds did not just manifest themselves in the velocity of deal activity, but we also saw valuations increase materially on those assets as they became more sought after. IE multiples went up, but also the underlying EBITDA and cashflow performance of those businesses also accelerated with rising energy and capacity prices across the market. So for owners of assets, principally private equity, that was a very, very strong signal for them to be in the market in 2025. And we see those trends continue in 26 with significant activity in the secondary M &A market. And we saw the first major deal of the year with Kogentrix and Vistra getting together in a $4.7 billion transaction in the last few days, but we will also see a shift in focus on more greenfield activity as the scope of addressable portfolios and assets declines somewhat in partnerships with big tech come to the forefront. On the other side of the generation equation, we saw the tale of two markets in the renewables M&A market. First, on the asset M&A side, let's call that in-place infrastructure. That market held up pretty well in 25 with 68 transactions and 35 gigawatts of capacity transacting roughly flat versus what we saw in 2024. But on the other end of the spectrum, platform M&A did slow down quite significantly in the second half of the year with deal activity down more than 50% as the impact of OBBA and some uncertainty in the renewables market had knock-on impacts on platform and pipeline valuations. Outside of generation, we also saw strong deal activity across a number of other energy markets, including the midstream space in the utility sector. In midstream, transaction activity was steady year over year at about 50 transactions and 50 billion in transaction value with the flagship transaction for the year being the KKR and CPP investment in Sempra infrastructure. And on the utility side, we saw some select going private activity, but more non-core asset sales from larger utilities support deal activity. And we expect to see both segments active in 2026 as accelerating capital spend is going to require folks to recycle some capital into those new opportunities, in some cases by selling down some existing assets or hiving off non-core asset sales. So overall, quite an active market, definitely some pockets of strength and some other pockets where perhaps there was some headwinds, but going into 2026, we're quite optimistic that we'll see that trend continue.
James Wright
That's excellent. Thanks, James. So really some thematic drivers you're running through there in your space to what's been underpinning a lot of that PF deal flow we talked about at the top. So that's interesting. Thank you. So Ines, turning the ball to you now, one thing we definitely saw last year was a dramatic growth in private credit investments for infra. At the start of 25, the private credit market was about $3 trillion compared to about $2 trillion in 2020. What are your thoughts there on that trend in terms of impact on the PF market? Has it been mature for these types of deals that we've been seeing? And do you see that shift remaining for the year ahead?
Ines Serrao
Thanks, James. That's a great question. I think it has been clear from all the press that we've been seeing recently that private credit is taking a larger market share. But I think it's important to also acknowledge that banks remain highly active. And the private credit industry has evolved from a niche asset class to a mainstream source of lending for many companies. And it can fill lending gaps for situations and assets that need customized financing in a way that banks can't or don't have the capacity to.
However, what we've been seeing more than private credit replacing banks, they are often partnering with them. So banks may hold senior tranches, for example, and private credit funds might take on higher yielding riskier position, which makes for a better deal for the client. More, sorry, going back, the private credit market is estimated to grow to five trillion by 2029, according to Morgan Stanley.
PricewaterhouseCoopers issued a report that noted that the total addressable market is approximately 31 trillion, which is over 10 times its current size. However, in terms of the risks, private credit is largely unregulated, which may raise questions in due course on transparency, oversight, and systemic risk associated with it. So we will have to continue to keep an eye on that risk.
And while private credit is reshaping the lending landscape, complementing and expanding the universe of credit solutions, like I mentioned earlier, its flexibility, resilience and rapid growth make it an important force in the future for corporate finance. But its rise also brings risks and regulatory questions that we'll all have to address together. I'll turn it back to you, James. What are your thoughts on the year ahead from a political, policy and geopolitical perspective? So small question.
James Wright
Yeah, wow, that's a big one. Could spend a couple of hours on this one, but I'll try and be on point. So very topical, obviously, energy markets and politics are just so intertwined that we should try and do this one some justice. think starting maybe on the geopolitical level, it feels like we're entering the year with either continuing or heightened volatility to where we left it in 2025. You the past week's events alone already signal this. So what am I thinking about there? Well, having seen the issues caused during COVID, what we should all be mindful of is where we could see potential hotspots of supply chain disruption against that volatility backdrop I talked about, particularly for East-West equipment flows and for the power and digital infrastructures where a lot of that equipment is still coming from Asia. So hard to predict there, but it's something we should be keeping close tabs on for sure. Whilst we're on the geopolitical level, I think one key policy decision that certainly most Western countries will continue to grapple with this year will be regulation for tech and AI. We just saw the under 16 social media ban in Australia that came in around the end of last year. I think just this last week, the UK has started investigating some activities of GROC. So it's going to be interesting to see who wins in the court of public opinion on those themes and what, if any, impact that has on data in for rollout and what countries do to accelerate some of that regulatory oversight. And then finally, at the global level, before we get down to the national level a second, I think we're really going to see the US continue to be less engaged at the supranational, you know, court of opinion, if you like, on key policy issues, particularly around energy and climate. We saw the executive order last week to take the US out of I think it was 66 international agencies and commissions, which included the UN Convention on Climate Change.
And that really seems to jive with some of the messaging this past week from the administration on both Venezuela and Greenland, where the mantra seems to be more about bilateral deal making for energy and minerals to shortcut or circumvent, shall we say, the traditional intergovernmental forums that have really been the mainstay of global diplomacy since the end of World War II. So on that somewhat existential cliffhanger, mean, pulling back closer to home, clearly the big political event for the year, I think, will be the midterms in November.
Republicans under Speaker Johnson currently have a pretty thin majority in the House of Representatives. I think as things stand, he can only afford to lose two Republicans in a party line vote. And then we have a couple of special elections coming up in February and March, which could really kind of tighten things up further. So there is a real scenario where Republicans have their legislative agenda somewhat stymied going into this year. And then on that topic, I think a key thing in our world, we're all holding out hope to see progress on would be bipartisan efforts on permitting reform. The House passed a speed act just before Christmas, although currently that faces an uncertain path in the Senate, priorities will quickly be shifting back to government funding when the temporary funding deal expires at end of this month. And then obviously, attention start moving rapidly back to the midterms. But across the aisle, there does seem to be pretty widespread recognition that we're long overdue for some permitting reform, particularly to invest in transmission and facilitate the US really staying at the leading edge of digital infra build out. So very last thing I'll just say therein is if that wasn't enough to keep us all up at night on our news feeds, it would be that we've all got to keep a close eye with our renewable energy hats on to what happens with FIAT guidance from Treasury as that kind of moves into formal rulemaking early this year. So was that enough politics?
Ines Serrao
Thank you, James. That definitely was enough. And I think we'll have a lot to keep our eyes on for the next year. And with that, maybe I'll turn back to James Brooks. James, when you reflect on some of those political and policy themes that James Wright was mentioning, how do you see that backdrop potentially affecting M&A deal volumes and strategic decision making in a world of increasing uncertainty?
James Brooks
First, I think it's clear that energy security and energy specifically as a national security topic is one of the most important thematics that I see continuing on in 2026. This past year, we saw that manifests itself in a few different ways. One example being the Westinghouse transaction with the US government to buy $80 billion of AP1000s, so new nuclear units which was quite unique in its formulation. And then more recently we've seen Big Tech Meta as an example enter into a few interesting partnerships, including a recent one announced in the past couple days with Vistra on new nuclear capacity. So I say keep an eye on that sector as it is a prominent one from an energy security point of view in the United States, but also in other markets like the UK, France, and Canada. I also see this thematic about energy security play out more broadly across the generation sector and anything really to do with grid and grid resiliency and the gas sector specifically. I think from a US government perspective, the ability to grow supply and deliver that supply to end markets in AI are of critical national importance and something that I think we'll see governments around the world support directly. so takeaway for me is keep an eye out for more strategic M&A, more strategic partnerships playing out across the sector. The second thing that we're keeping an eye on is geopolitical risk. Clearly that's an external risk that we did not have as much of a focus on at the beginning of last year or over the last few years in the M&A market. But I think boardrooms today are acutely focused on that. They're focused on the resiliency of their businesses and assets to external. Both regulatory and geopolitical risk and any M&A transaction in this market will now have to deal with that lens as part of their approval processes internally. And I think that might affect some transactions in 26, but we may also see some opportunity emerge to position folks to position themselves in certain segments as supply chains and capital cool shifts. So something to keep an eye on and certainly as M&A practitioners, we are again focused on the nature of who the buyer is or the investor is in an M&A or capital raise process as it pertains to any regulatory approval that may be required. And I think that's true in the US, but I think that's also true in other Western jurisdictions in Europe and Canada and Australia where that is increasingly top of mind for folks.
James Wright
Yeah, great points, James. And I think, you know, as you were sort of alluding to there, we all live in a world now where we, you know, wake up in the morning, turn our phones on and say, that just happened overnight, right? And we have to, we have to adapt from a business perspective pretty quickly. So some great points there. let's, let's just pivot now. Let's do a quick round robin between the three of us on some of the challenges we saw in the market during 2025 and any quick thoughts on whether we think they're still relevant for the year ahead. I'm happy to kick off with a couple I've been thinking about. mean, firstly, top of mind for me was the pre and post 03B for all around policy changes for tax equity and specifically the Treasury implementing guidance or maybe lack of at the time. That certainly caused some reallocation of risk in deals. For example, there were certain tax credit adders, assumptions in there that lenders just couldn't take a view on in lieu of some of that guidance being in place. I think to a certain extent, a lot of that has now been priced into deals and the market has managed to find a way to get those deals done. But obviously noting the gap on FEOC that I referenced earlier in the pod as well.
And then kind of related to that, the flurry of executive orders last year really caused a lot of noise and some level of lended nervousness. But again, to a certain extent, the market found a way to navigate and get those deals done with offshore wind being the big exception. I don't see that materially changing this next year. Renewable energy will remain a key enabler for the country's industrial and technology global leadership ambitions over the medium term.
And I'm of the view that there's mutual recognition of that point in both political parties when folks think about the fundamentals. again, perhaps with offshore wind being the outlier in the short term. Ines, what about you?
Ines Serrao
Thanks, James. I completely agree with you. And I will also keep my renewable energy banker head on in focus on another angle that we focused on last year and will continue to focus on next year. And I wouldn't say it's keeping me up at night, but it's definitely something that banks are monitoring and it's the growth of corporate PPAs mostly linked to the growing AI demand that we've talked about in the beginning of the podcast. And I mean, at the risk of stating the obvious, but the risk profile of a corporate is fundamentally different from the risk of a utility as a load serving entity who can pass through its costs to a broad client base. And banks traditionally have dealt with the risk of financing to utility off takes in the project finance world. And so while utilities are certainly not risk free, and we've seen that historically, but for example, if the area that a utility serves is affected by an economic downturn, obviously the credit quality of that utility can deteriorate. Their credit risk profile is much stabler than a corporate. And for a corporate, their credit quality depends on their specific business model. So for banks taking long term and investors taking long term risk, let's say 20 year risk on a corporate is different credit analysis than taking the same 20 year risk from a utility. So we will continue to monitor this. Deals have been done. CIBC has been leading a lot of deals with the corporate off-takers and we're very proud of that. But as a sector, we'll continue to keep an eye on this risk as we go into 2026.
James Wright
That's a great point. obviously the nature of those deals, the corporate side has changed as well the last couple of years, right? I mean, it used to be predominantly retail names, industrial names, big manufacturing names, and now it's really been dominated by the large tech names. James, what about you?
James Brooks
Yeah, first for me is how the rapidly evolving climate and regulatory environment impacts asset valuations. We saw in 2025 pretty material shifts in regulatory frameworks and market dynamics, and that made it more complex, I would say, to underrate long dated cash flows in certain segments and caused some practitioners and owners to recut project economics mid-flight over the course of the year. And I think that type of complexity increases cost of equity. It introduces some conservatism in underwriting assumptions in this market. And that obviously can be a headwind for valuation. I think that's a challenge. think the counterargument that most folks had this year was that in-place infrastructure was increasingly valuable and any perceived risks that I highlighted earlier that affect cost equity are more than offset by the fact that you have steel in the ground and that's an increasingly scarce thing to have. so key question for us will be how that plays out on valuation and deal activity in 26. The other question for me is how demand for power from the AI sector will manifests itself over the next couple of years. The power sector is one that has operated in our market where we essentially had stagnant demand for two decades. And now we're facing growth that significantly outstrips GDP growth. That is a huge task for a capital intensive and highly regulated sector. And that challenge is was more in focus in 2025 and I think that challenge will be very much in focus in 26. And it will be interesting to see how the sector meets the challenge and there will be no doubt some bumps along the way. Hopefully those are green run bumps on a ski hill and not double black diamond type bumps to use a ski analogy. But that is, you know, that is the key challenge for our sector. Having said that, you know, while there are some challenges and some headwinds. We are in a very, very strong M&A cycle. There is very significant liquidity in the market, both from an equity and debt perspective, stronger than perhaps we saw at the beginning of 2025. And the tone in this market is risk on for many of our sectors. And we expect to see a very strong 2026 on the deal side of the house.
James Wright
Yeah, great points, James. And when I think about your power demand point, also come back to transmission, transmission, transmission, right? We've got to crack that knot pretty quickly as well. OK, thank you. So Ines, as we draw this one to a close, let's touch on the year ahead again. So what's your outlook for renewables and transition PF for 2026? What are you thinking for the year ahead?
Ines Serrao
So we've touched on a few of these topics during the podcast, but perhaps the way I would summarize it is that I am really looking forward to 2026. I think it will be a year of high activity and a lot of exciting projects to build. I think on the US side, there will perhaps be less uncertainty in terms of policy and regulation than we had in 2025, which is relatively easy to achieve.
Hopefully that's all working in that direction. But then higher uncertainty perhaps on the geopolitical front, which may impact US power markets as well. There will be continued investment in renewables and LNG. And gas will have more attention of investors. And I hope we make good progress towards more nuclear investments as well.
As James Brooks mentioned, we expect M&A and Pivoti with high capitalised sponsors continue to be strong. And of course, I cannot wait to see how large the largest deal will be next year when we reconvene for this conversation. And so I'll leave it out. Is this the year where we will reach a 50 billion dollar deal in the PIF world in the US?
James Wright
We'll have a glass of wine and there's on that one. I'll take that bet. Excellent. Some great points there. Okay. So that was some good commentary team. Thank you. So this is the Energy Shift podcast. And as you all know, we like to finish off by talking about something that shifted all of our weeks. I will set the tone for 2026. I'm going to start by something completely non-business related and do a little public service announcement for sports fans everywhere. And I'm going to urge you all to start researching and following if you're so inclined, the FA Cup in England. All right. So bear with me, Ines. I can feel you groaning here for a second. It's the oldest football or soccer competition in the world. Started in 1871. It's a knockout tournament that practically any English team can enter.
This year over 700 teams played and the magic of it is that as a result you get teams you've barely or never heard of playing against some of the best teams in the world from the Premier League. So just this past weekend we actually had history being made when Macclesfield FC, which is a sixth tier English club, beat Premier League team Crystal Palace who actually won the FA Cup last year. And that's the first time it's happened in 117 years. So, there you go. If that's not the basis of a Netflix documentary, I don't know what is. I'm a self-confessed gooner on this podcast, so I'm not going to win it. Go. All right. Over to you.
Ines Serrao
Do you want to base a bet on who's going to win?
So I'm sorry, I'll be more of a Debbie Downer and I will flag the geopolitical tensions as shifting my week, the past week. As you said, James, we wake up and look at our phones in the news and see what's going on in the world.
And that has been the focus of my week recently. So we'll see what the future brings in 2026. I'm so sorry.
James Wright
Wow, what a mood suck. James, can you lift this up again at the end?
James Brooks
Yeah, I'll go with a personal one. I just came off vacation. So this was my first ski trip with the family of the year and the kids 13 and 10 have surpassed me on the Black Mogul Run. So, I'm getting back to my training regime so that I can keep up with them on our return tour in the February, March timeframe. it was quite humbling and I'm looking to keep my ego intact. That's my shift of the week.
James Wright
That's great. And I have to ask, ego intact, also more importantly, ACLs all intact?
James Brooks
All good, the body feels great, the ego does not feel so good. So more psychological than physical.
James Wright
Excellent, stuff. Well, listen, James and Ines, that was a great conversation. Really, really good to kick us off for 2026 and it's going to be an exciting year. So let's go forth and do some great deals. Happy New Year again.
Ines Serrao
Happy New Year!
James Brooks
Happy New Year.
Outro: Please join us next time on The Energy Shift as we continue to tackle some of the hottest topics in the US energy transition landscape, providing fresh insights and viewpoints to help you shift your perspective.
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