Report: Private Equity Ownership of U.S. Power Plants: A Hidden Climate Threat

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Private Equity Ownership of U.S. Power Plants: A Hidden Climate Threat

While the public pushes for a transition to renewable energy, private equity firms operating in the shadows are propping up the dirty energy industry by acquiring more and more fossil fuel assets, compromising the health and safety of our communities and the environment in the process.

Through its continued support of fossil fuel-fired energy production in the U.S., private equity investments in power plants pose a significant threat to neighboring communities. Fossil fuel plants emit dangerous air pollutants that worsen air quality and have been proven to increase the risk for various types of cancer, respiratory, and cardiovascular diseases. Communities of color are especially forced to bear the brunt of fossil fuel’s evils because of racist and discriminatory policies that have often situated power plants near Black and Latinx communities and have long been disproportionately impacting the health of these communities.

Private equity’s extractive business model encourages excessive risk-taking and threatens to exacerbate the climate crisis and increases the likelihood of disaster at private equity-owned power plants. Resources that should go to operations, maintenance, upkeep, and decarbonization are instead diverted to the pockets of Wall Street investors and lenders.

This report presents the first comprehensive estimate of private equity ownership of power plants and climate-warming emissions in the United States. Americans for Financial Reform Education Fund examined the private equity ownership of utility-scale electricity generating assets from the beginning of 2020 to September 2021, cross-referencing with the Energy Information Administration’s (EIA) power plant inventory and Environmental Protection Agency (EPA) data. Some of the top findings include: 

Private equity is a major owner of U.S. power plants with approximately 150,000 megawatts of capacity: Private equity firms own 696 utility-scale electric power plants with 149,896 MW of capacity, including: 217 natural gas plants with 97,385 MW; 15 coal plants with 18,009 MW; 23 oil plants with 4,158 MW; 192 solar plants with 4,292 MW; and 147 wind power facilities with 17,622 MW. A small share of private equity-owned power generation capacity comes from hydroelectric, geothermal, biomass, or nuclear power plants (0.8 percent, 0.5 percent, 0.3 percent, and 1.7 percent, respectively).

Close to 80 percent of private equity-owned power plant capacity is powered by fossil fuel: More than three-quarters (79.8 percent) generation capacity are fossil fuel-fired natural gas, coal, and oil generation facilities—above the 63 percent share of total U.S. utility-scale electricity generating capacity from fossil fuels, as of the end of 2021. The private equity industry’s power plant portfolio is heavily tilted to natural gas, with 65 percent of the industry’s capacity coming from gas-fired power plants—far above natural gas’ 43 percent share of total U.S. electric power capacity

Private equity-owned power plants spewed an estimated 200,749,403 metric tons of carbon dioxide annually: Private equity-owned natural gas power plants emitted an estimated 146.8 million metric tons of carbon dioxide, coal plants an estimated 47.5 million metric tons of carbon dioxide, and oil plants an estimated 6.5 million metric tons of carbon dioxide. If it were a country, U.S. private equity power plant emissions would rank 31st among countries’ CO2 emissions, right behind Spain and ahead of Argentina. 

Private equity-owned power plants account for 14 percent of U.S. power plant climate emissions: Private equity’s ownership of fossil fuel power plants accounts for one-seventh (14 percent) of total U.S. power plant’s CO2 emissions (1,447 million metric tons), despite only owning 13 percent of total capacity. 

Almost all CO2 emissions (89 percent) are concentrated among 10 private equity investors: The biggest private equity power plant owners hold vast portfolios of plants where almost all of the CO2 emissions from these plants are concentrated despite owning only 67 percent of total generating capacity.

Read the full report here.