(Reuters) -Constellation Energy said on Friday it might buy privately held Calpine Corp, a geothermal and natgas energy company, in a cash-and-stock deal valued at $26.6 billion including debt, sending Constellation’s shares up 8.8%.

The deal comes at a time when electricity demand is predicted to rise to record highs this 12 months, in response to data from the U.S. Energy Information Administration.

The transaction, which is predicted to shut within the second half of 2025, could add $2 billion to Constellation’s free money flow annually, and together the businesses would have nearly 60 gigawatts (GW) of capability from zero- and low-emission sources, including nuclear, natural gas and geothermal, Constellation said.

Reuters was the primary to report in May last 12 months that the three investment firms that took Calpine private in 2017 – Canadian Pension Plan Investment, Energy Capital Partners and Access Industries – were taking a look at options for Calpine including a sale.

Unlike regulated utilities, Calpine being an independent power producer allows it to sell power at market prices.

(Reporting by Seher Dareen in Bengaluru; Editing by Shilpi Majumdar and Shounak Dasgupta)