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Darpan Kapadia, COO at LS Power, Interviewed by Richard Anthony, Senior Managing Director & CEO of Evercore Private Funds Group
Richard Anthony (“RA”): Welcome and good to see you. I believe we are going on just over 10 years working together and it has been an incredible journey to follow. But for our readers who do not know you as well, please tell us about yourself and LS Power.
Darpan Kapadia (“DK”): Thank you. My name is Darpan Kapadia and I’m the Chief Operating Officer of LS Power, a US energy infrastructure investor, developer and operator.
LS Power is a strategic investor in the US power sector. The firm was established in 1990 to develop, finance, build, own and operate utility-scale power generation projects. In 2005, we entered the acquisition business, raising our first private equity/ infrastructure fund that year. We are now close to fully deploying our fifth flagship fund and have raised approximately $14 billion in commitments across the full platform.¹
From our first fund through to today, we have grown from 30 employees to over 400, adding internal resources as the opportunity set expanded. We like to think of ourselves as a hybrid – the financial capabilities of an investment firm coupled with the management and operational capabilities of a power company – all residing on one platform. As such, our strategy is a value added one.
Our sector, and therefore the opportunity set, is constantly evolving, and we’ve consistently tried to stay ahead of the curve – investing in gas plants since the 1990s, renewables and transmission starting in the 2000s, and energy storage, EV charging,
renewable fuels and energy efficiency platforms more recently. We believe we are the only player in the space with true deep domain expertise across the full spectrum.
RA: In your recent William & Mary opening convocation address, you said your mother lamented your leaving Goldman Sachs to join what was then a much smaller, lesser known, LS Power in 2004. Why did you do that?
DK: I am a proud William & Mary alum, as well as a graduate of Northwestern’s Kellogg School of Management, and am happy to have served both institutions in various leadership capacities over the years, including currently as chair of W&M’s board.
It was an honour to have been selected as this year’s convocation keynote speaker for William & Mary, a special opportunity to welcome the incoming class and provide them with a few words of advice and encouragement, with hopefully some wisdom sprinkled throughout.
As an immigrant family that came to this country with very little, I can understand my mother’s initial concerns when I told her I was leaving Goldman Sachs. But as I told the students, my north star has always been the search for meaningful work with people I respected. That’s what I found at LS Power and I’ve never looked back. I think my mother would be proud of what we’ve built.
RA: It seems it was the right decision as power is a hot topic these days. You must be busy!
DK: Indeed. The sector is in the midst of a massive transformation.
As has been covered pretty well in the press, electricity demand in the US is growing at rates we haven’t seen before as Artificial Intelligence penetrates, data centres proliferate, manufacturing reshores and industries gradually electrify.
In our business, after more than 20 years of near-zero load growth, that’s a pretty big deal.
RA: Is that on the horizon or already happening?
DK: It’s already here. Over the last 12 months, electricity demand in the MidAtlantic/PJM market has grown by over 3% and in ERCOT/Texas it’s grown by over 4.5%.² That may not sound like much, but in a very capital-intensive sector, it changes the way the industry needs to invest and operate, especially after decades of flat power demand.
RA: Will that growth be ongoing or just for a few years?
DK: We think we’re in the early innings of a durable secular trend, where grid reliability, let alone energy dominance, will require us to rely on more of everything: more thermal generation and storage for firm capacity; more renewables for clean low-cost energy; more transmission to move it around; and more distributed resources and energy efficiency platforms to reduce the strain on the system.
RA: Is the grid ready for this?
DK: Not yet. Reserve margins are increasingly thinning, interconnection queues are backed up, critical equipment supply chains are backlogged, permitting processes meet delays and opposition, and skilled labour markets are tight. In other words, it’s never been harder, never taken longer and never cost more to build new large scale energy infrastructure. In July 2025, Reuters cited industry analyses by McKinsey and EPRI that suggested that a new gas plant can take more than five years to bring online and can cost as much as $2,500/kW – more than double the roughly $1,000/kW it cost not that long ago.³
We are good developers and if we started a new greenfield gas generation project today from scratch, the earliest we could be energised and delivering electrons, even in a place like Texas, which is a business and construction-friendly state, is late 2030 or early 2031.⁴ And it would be the most expensive gas plant we have ever built.
In this kind of environment (where demand is growing much faster than supply), it’s a good time to be long existing, already built, cash flowing generation capacity (especially the right kind of capacity and at the right basis). And the good news is, we are just that.
RA: How is LS Power positioned for this opportunity?
DK: Across our funds we own over 21,000 MW of operating gas and renewable generation that we acquired at sizable discounts to new build.¹ We are also about to close on another 1,300 MW of operating renewables.
And, importantly, we own this existing capacity as new entrants cost a lot more and take longer to come online. That advantage will be reflected in our cashflows – and our limited partners are seeing it come through in their distributions.
RA: It’s great to see that LS Power has both top quartile net returns and DPI. That said, if things are attractive enough for you to be sellers, are you going to have a hard time buying?
DK: Far from it. We think we’re in the early stages of a megatrend – a surge in demand colliding with increasingly constrained supply – and we’re not even close to being oversupplied.
Although asset prices for gas generation have increased, their cash flows and replacement costs have increased even more.
The last gas power plant we developed which reached commercial operations in 2014 cost $900/kW. A similar combined cycle gas plant 5 years ago would have been $1,200/kW and today’s estimates range from $2,200-
3,000/kW.¹ So operating gas generation assets that can be purchased at a discount to these levels will have a significant moat.
Additionally, given the negative sentiment around the subsector, renewables are currently trading at historically low valuations. So we’re leaning into renewables. It reminds us of the overhang around conventional generation five to seven years ago and that turned out to be a good time to buy.
RA: When you refer to LS Power’s platform, what do you mean exactly?
DK: When I joined the firm over 21 years ago, we had fewer than 30 people. We now have over 430 people, reflecting the substantial investment in our capabilities over the years.
Beyond the typical groups in a financial sponsor, like M&A, Legal and Tax, we have groups more akin to a Utility or Independent Power Producer, with groups focused on Asset/Operations Management, Energy Trading & Management, Development, Project Finance, Engineering & Construction, Government & Regulatory Affairs, Power Marketing and Transmission, to name a few.
Because of our approach and resources, we generally don’t have to hire external consultants or buy side advisors. As a result, we have the ability to transact quickly, quietly and with conviction and then drive value post investment. There is no other fund manager
set up like us in our space.
With this platform and the reputation we’ve built over the last 35 years, we believe we are more than ready for the opportunity ahead of us.
In a lot of ways, the market has come to us.
RA: Any concerns that things are getting overheated?
DK: We think today’s environment is the most exciting opportunity we’ve seen yet.
When you see these kinds of dramatic shifts – in terms of fundamentals, policy and sentiment – companies (including large multinationals) rethink, reprioritise and reposition themselves; previously illiquid assets, such as conventional generation, try to find a market; and the proverbial tide goes out, revealing who’s been swimming naked (like aggressive renewable developers).
Think about the consensus views on conventional generation and renewables just three years ago – they were flipped.
This backdrop allowed us to deploy 70% of Fund V in less than two years and we’re excited about the opportunities ahead.
RA: Since power is now the second derivative of data centres, it’s attracting extra attention from what some might call “tourists”. Does the extra competition make things harder?
DK: If the past is any indicator, today’s new competition often becomes tomorrow’s opportunity.
We’ve seen it time and again in this sector. Whether it was hedge funds, generalist midcap buyout funds, or others, they all tend to underestimate the complexity.
You can’t just buy assets for the “sector beta” – this is a micro game, where every generation project has its own economic ecosystem. Two identical projects right down the road from each other can have drastically different P&Ls due to varying access to fuel, transmission (which define your reachable load and may face upgrade costs) and other factors, which means physical and commercial profiles can differ materially.
Also, scale matters. Buying one-off assets is risky – it limits your ability to diversify operational risk. In a tightening market, price volatility increases, and failing to deliver on commercial commitments can be painful.
So the better way to achieve risk adjusted returns is through a platform. Ours took 35 years to build – that kind of capability is hard to replicate.
RA: It seems you are well positioned then. What should we expect from you in future portfolios?
DK: As noted earlier, we are seeing secular, not cyclical, growth.
It is truly a moment for an “all of the above” response. Our portfolio will span utility-scale gas generation, all types of renewables and energy storage, as well as distributed energy resources, which operate closer to the customer.
We’ve generated top tier returns⁵ during a time when power demand was not growing, predominantly through being selective and driving value post-acquisition. We expect to continue to do the same, with the current market backdrop providing an additional tailwind.
RA: How has the One Big Beautiful Bill Act (“OBBBA”) affected your investments? How do you price political and regulatory risk into 10+ year capital commitments?
DK: The legislation will have a variety of near-term impacts, including shortening the phaseout timeline for solar and wind credits, with projects now required to begin construction by July 4, 2026 to qualify, and tightening restrictions on utilising certain foreign manufactured equipment.
In the short term, this is forcing a market recalibration, creating advantages for largescale platforms that are better equipped to navigate complicated supply chains, tariff implications and greater interconnection and permitting costs to safe harbour, or grandfather, their projects for the tax incentives.
In the longer term, power prices and renewable power purchase agreements will likely have to increase to send the appropriate market signals and attract new renewable generation, in a post-tax credit market, to help balance the grid. We are going to need new renewables, new gas generation and new storage to do that.
We’ve always appreciated the importance of political and regulatory advocacy. It’s just a part of how we operate. We have a eight-person Government and Regulatory team that benefits from over three decades of active engagement at each of the federal, regional, state and local levels.
RA: Further to the regulatory risk, how do we make sure the power demand growth doesn’t trigger affordability crises or political backlash that erodes returns?
DK: Rising utility rates are becoming an issue in state and other elections, such as the recent gubernatorial races in New Jersey and Virginia, and will no doubt come up in some of the 30 other Governor races in 2026.
At the heart of the matter is ensuring that the primary drivers of new demand, which at the moment are predominantly data centres and hyperscalers, bear the bulk of the incremental infrastructure costs, such that they are not socialised across retail customers. Fortunately, reforms are already underway to address this.
RA: It’s amazing that the electricity we all take for granted has so much going on behind the scenes. We appreciate you helping us break it down.
DK: Thanks for having me!
Darpan Kapadia, COO LS Power
Darpan Kapadia joined LS Power in 2004 and serves as the Chief Operating Officer. Darpan is a member of the Firm’s Management Committee and Investment Committee, overseeing one of the largest power generation, transmission and energy infrastructure companies in the United States.
Richard Anthony, CEO of Evercore Private Funds Group
Since its establishment in 2010, Evercore PFG has become one of the leading private capital advisors globally, with offices in London, New York, Hong Kong, and Singapore.
Original content published by: Evercore Private Funds Group
1. LS Power proprietary data
2. Energy Information Agency, July 2025
3. Reuters, “Rush for US gas plants drives up costs, lead times,” July 2025
4. ING, “Power up! Why the US needs every energy source to stay dominant,” October 2025
5. LS Power’s three active funds (LS Power III, IV & V) all exhibit top quartile net IRRs for their respective vintages, relative to the Preqin Infrastructure North America Benchmark as of Q2 2025
