National Grid’s $1.75B Bet | Joulent Shows What It Takes to Justify New Gas

National Grid Ventures’ (NGV) $1.75 billion investment for a 35% stake in Joulent, announced July 1, shows what it now takes to justify building new gas rather than buying it. As we laid out in EIR’s latest report, Cheaper to Buy Than Build, greenfield combined-cycle economics have deteriorated to the point where a merchant build makes little sense. Post-2024 CCGTs now cluster near ~$2.0 million/MW to construct (Figure 1), while operating gas plants change hands for about $1.0 million/MW. That ~$1 million/MW replacement-cost wedge means acquirers are paying roughly 50 cents on the dollar versus building, which is why investors have overwhelmingly chosen M&A over greenfield.

The exceptions to that rule are joint ventures that spreads capital and risk, subsidized debt, a creditworthy long-term offtaker, or capacity prices high enough to finance new entry (At the Cap, Below CONE | Why PJM’s Capacity Market Needs a Reset). The Joulent deal checks two of those boxes. Joulent’s flagship 2.67 GW Project Kilby in West Texas is a 50/50 venture with Chevron, anchored by a 20-year power purchase agreement with a Microsoft-operated data center, with first power targeted for 2028 on secured GE Vernova turbines. A joint venture backed by a strong, long-dated PPA is a combination necessary to underwrite a greenfield build in ERCOT, where a merchant plant would otherwise need, at a 2.5MM/MW capital cost, roughly a $70/MWh contract to pencil, above current clearing levels. By buying into a partnership rather than building the plant itself, and by pairing a hyperscaler offtaker with a JV partner, the deal delivers a contracted, de-risked infrastructure return.

Research Highlights:

• Cheaper to Buy Than Build | The Replacement-Cost Wedge – Enverus Intelligence® Research analyzes 76 CCGTs with disclosed capital costs and commercial operation dates from 2014-33, finding that newbuild costs have roughly doubled to ~$2.0 million/MW for the post-2024 cohort while operating gas M&A clears near ~$1.0 million/MW. We read the ~$1 million/MW wedge as a structural floor under incumbent IPP valuations and a tailwind for capacity and scarcity pricing.

Additional News Coverage: 

• National Grid Ventures invests $1.75bn in Joulent for 35% stake to develop large-load power 
• RWE doubles down on U.S. in 6-year plan, adds gas-fired power  

Top Three Takeaways:

1. Why is building new gas generation becoming harder to justify?

• New combined-cycle gas plants have become significantly more expensive to build, with costs approaching $2 million/MW or more, while existing gas plants can be acquired for roughly $1 million/MW. This creates a substantial cost advantage for buyers, which is why investors have generally favored acquisitions over greenfield development.

2. What makes the Joulent project an exception to the “buy, don’t build” trend?

• The project combines two critical ingredients that reduce risk: a joint venture structure that shares capital costs and development risk, and a 20-year power purchase agreement (PPA) with a Microsoft-operated data center. Together, these provide the financial stability needed to support a new-build project that would otherwise struggle to compete in today’s market.

3. What does the National Grid investment signal about future gas development?

• The deal highlights that new gas projects are most likely to move forward when they have strong contractual backing and risk-sharing partners. Rather than relying on merchant market revenues alone, developers increasingly need long-term offtake agreements and strategic partnerships to justify new generation investments.