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Blackstone To Pay $1B For Natural Gas Power Plant In Data Center Alley

Jan 27, 2025 - bisnow.com
Blackstone’s energy investment unit has agreed to acquire the 774-megawatt Potomac Energy Center natural gas power plant in Loudoun County, Virginia, for around $1 billion from Ares Management. This acquisition is driven by the soaring electricity demand from data centers in Northern Virginia, a major hub for data centers in the U.S. Blackstone views this investment as crucial for supporting the rapid growth of data centers and AI, emphasizing the need for robust electric infrastructure. The firm has been actively investing in data centers and related infrastructure, with a data center portfolio valued at $70 billion and another $100 billion in development. Blackstone is positioning itself at the forefront of the intersection between digital infrastructure and energy needs, seeing significant opportunities in this space.

The increasing electricity demand from data centers is expected to significantly impact U.S. power consumption, with data centers projected to account for 44% of new energy consumption by 2028. This surge is prompting investments in natural gas infrastructure, as utilities struggle to meet the demand. Blackstone’s acquisition is part of a broader trend where asset managers are investing in energy infrastructure to support data center growth. Other firms, like KKR, are also making strategic investments in power transmission and infrastructure to address the electricity needs of data centers. The growing reliance on natural gas for powering data centers is leading to significant capital market activity, with major deals like Constellation Energy’s $16.4 billion purchase of Calpine highlighting the trend.

Key takeaways:

  • Blackstone's energy investment unit is acquiring the Potomac Energy Center natural gas power plant in Loudoun County, Virginia, to meet the growing electricity demand from data centers.
  • The acquisition is part of Blackstone's strategy to invest in energy infrastructure to support the rapid growth of data centers and AI, with the firm highlighting the plant's proximity to over 130 data centers.
  • Data centers are expected to account for the largest share of new energy consumption in the U.S., with electricity demand projected to outstrip supply as soon as next year.
  • Natural gas infrastructure is becoming a key focus for investment due to the data center industry's increasing energy usage, with significant capital market activity observed in this sector.
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