Private-equity firms have made billions in recent years investing in natural-gas-fired power plants, but these deals are now becoming harder to find.

More power companies are looking to acquire these assets to feed the energy demand from the artificial-intelligence boom, investment bankers say. This competition and the rising costs of building new projects mean private-equity firms have fewer opportunities to acquire natural-gas-fueled electricity generators.

"There has been an absolutely tremendous increase in gas-fired [mergers and acquisitions] over the past 18 months," Samuel Scroggins, a managing director at investment bank Lazard who focuses on the power sector, said at a Houston conference last week organized by ratings provider S&P Global.

Lazard's team alone worked on deals involving gas-fired plants with a total capacity of 50 gigawatts during the past year, Scroggins added.

Surging U.S. demand for electricity to run AI systems is driving power companies to expand their holdings of gas-fueled generators capable of providing the round-the-clock supply that data centers need.

This demand enabled private-equity firms to score some profitable exits, including Energy Capital Partners' $3.45 billion sale earlier this year of three natural-gas-fired power plants in Ohio and Indiana to power company Talen Energy. The three plants had a combined capacity of about 2.6 gigawatts.

Having sold many of their gas-fired plants, private-equity firms can have difficulty making new investments in the sector, energy bankers and fund managers say.

Rising construction costs reduce the attractiveness of building new assets, the bankers and fund managers say. Equipment shortages, particularly of turbines, and protracted permitting processes make construction of new gas plants increasingly expensive and prone to delays, they said.

Building the most efficient types of gas plants-combined-cycle generators that produce electricity both from a natural-gas- and a steam-driven turbine-can cost the equivalent of $3,800 per kilowatt of output capacity and take as long as five years, according to Scroggins. Rising construction costs also are lifting the prices of existing gas plants to record levels-as much as $2,500 per kilowatt-but they are still far below the hefty investments new projects require, Scroggins and power-company leaders said.

The decision to "buy existing plants, to us, is pretty easy when you look at the return expectations of buying versus taking on all that [construction] risk for four to five years," Darren Olagues, Talen's chief development officer, said. "We're bullish on existing assets."

But the preference for acquisitions over building new plants increases deal competition for private-equity firms, company leaders and energy bankers say.

Gregory Hort, also a managing director at Lazard's energy-infrastructure group, said the bank keeps a list of natural-gas-fired plants that have a total capacity of at least 200 megawatts and might be available for sale. That list has shrunk to about two pages from seven just a couple of years ago, due to the recent flurry of acquisitions, he said.

Many of these sales were "to long-term owners of assets and not, as was the case 10 years ago, to private investors who were more short-term-oriented, which suggested [the plants] would trade hands again," Hort said. "They [likely] are not going to pop up again [for sale] a couple years down the line."

He added, however, that a two-page list of gas-fired plants still represents a good number of opportunities for private-equity firms and other potential buyers.

"We think we'll continue to see activity," Hort said. "But it's not going to be anything like what it's been in the past couple of years."