“We at DelMorgan & Co. believe the next leg of U.S. power investment will be defined by policy clarity for nuclear, diminishing tax incentives for renewables, and surging grid and storage demand from AI-related electrification.”
Executive Summary
The U.S. energy sector is entering a transformative phase in 2025, propelled by surging electricity demand from data centers, artificial intelligence (AI) workloads, electric vehicles (EVs) and broader electrification trends. At DelMorgan, we anticipate that clean energy investment will pivot toward nuclear, bolstered by preserved and enhanced tax incentives, alongside a maturing landscape for renewables and grid infrastructure. Accelerated phase-outs of renewable energy credits, stringent sourcing requirements and evolving regulatory frameworks are reshaping project economics. Capital is increasingly directed toward solar-plus-storage, grid modernization and hybrid projects. Developers and investors with robust execution capabilities, adept at navigating regulatory, supply chain, interconnection and labor risks, are poised to capture significant value in this dynamic environment.
Policy Landscape
Recent legislation enacted in 2025 has solidified tax incentives for nuclear projects commencing construction before December 31, 2033, with additional bonus credits for facilities in designated energy communities. Conversely, tax credits for solar and wind are facing accelerated phase-outs, with heightened scrutiny on compliance with foreign entity sourcing restrictions and prevailing wage and apprenticeship requirements. Regulatory streamlining efforts are advancing to expedite licensing processes for nuclear and renewable projects, though implementation timelines remain uncertain. These policy shifts underscore the need for strategic alignment with evolving compliance frameworks to maximize incentive eligibility.
Transaction Signals and Market Activity
Market activity reflects growing investor confidence in clean energy platforms with mitigated risks. Solar-plus-storage projects with secured offtake agreements, interconnection approvals and permitting are attracting significant capital inflows, evidenced by large-scale debt financings for project pipelines underpinned by long-term power purchase agreements (PPAs). Grid-adjacent services – such as distribution automation, distributed energy resource (DER) management platforms and microgrid integration – are emerging as focal points for mergers and acquisitions (M&A). These trends signal a market preference for assets with predictable revenue streams and operational resilience, driven by the electrification demands of AI and data center growth.
Risks and Compliance Challenges
The energy transition landscape is not without challenges. Developers face increasing complexity in navigating foreign entity restrictions, domestic content requirements and material sourcing regulations, all of which impact tax credit eligibility. Compliance with wage and apprenticeship standards is now a critical determinant of project viability. Interconnection delays and permitting bottlenecks continue to pose material risks, with some regions experiencing multi-year queues. Inflation in materials and shipping costs, coupled with constrained supply chains, is exerting pressure on project economics. Projects failing to meet incentive deadlines risk significantly diminished returns, underscoring the importance of disciplined execution and proactive risk management.
Strategic Outlook
We at DelMorgan anticipate that developer platforms with superior execution capabilities, deep regulatory awareness and robust supply chain management will lead the sector in 2025. Clean, robust power sources – nuclear, geothermal and hydroelectric – will play an increasingly vital role in complementing intermittent renewables, ensuring grid reliability amid rising demand. Hybrid projects integrating storage with renewables are well-positioned to capitalize on incentives and attract capital, given their ability to deliver dispatchable power. For investors, risk-adjusted returns will hinge on careful assessment of regulatory uncertainty, schedule risks and developer track records. Strategic positioning in nuclear, storage-coupled renewables and grid infrastructure will define market leaders in this next phase of the energy transition.
About DelMorgan & Co. (delmorganco.com)
With over $300Bn of successful transactions in over 80 countries, DelMorgan‘s Investment Banking professionals have worked on some of the most challenging, most rewarding and highest profile transactions in the U.S. and around the globe. In the upcoming year, we expect more high-quality deal execution for more clients and welcome the opportunity to speak with companies interested in potentially selling their businesses or raising capital.
