Blackstone Cites Data Center Demand in Acquisition of 774-MW Gas-Fired Plant in Virginia
The data center energy crisis has attracted the attention and finances of the nation’s biggest private equity firm.
Blackstone Inc.’s Energy Transition Partners is acquiring a 774-MW natural gas-fired power plant in northern Virginia, to serve that mission-critical customer demand.
The Potomac Energy Center is in Loudoun County, Virginia, part of a region hosting close to a quarter of total U.S. data center capacity. Many industry forecasters are predicting up to an additional 55-60 GW expansion in data facilities being installed nationwide through the early 2030s.
Blackstone, ranked by Forbes as the top private equity firm with more than $1 trillion under management, considers power infrastructure supporting data centers and the growth of artificial intelligence (AI) as “one of the firm’s highest-conviction areas.” The Potomac Energy Center, currently owned by Ares Management and believed to be valued at around $1 billion by several news outlets, is within proximity of more than 130 data centers, according to the report.
“This investment underscores Blackstone’s commitment to investing in the electric infrastructure required to power AI innovation,” Bilal Khan, senior managing director at Blackstone Energy Transition Partners, said in a statement. “We believe Potomac is well-positioned to help meet data center-driven power demand growth in northern Virginia.”
Blackstone itself did not divulge the buying price for the Potomac Energy Center. The investment firm has revealed several energy sector moves lately.
In August 2024, Blackstone Energy Transition Partners announced it was acquiring a majority stake in Westwood Professional Services Inc., an engineering design firm focused on renewables, power, and public infrastructure markets. The private equity firm also has invested deeply in energy transition firms such as backup power systems provider Trystar and grid equipment firm Sediver.
The latest deal for Potomac Energy Center is unique in private equity’s acquisition of an entire power plant.
“Potomac is one of the most efficient gas power plants in the region and has the potential to integrate a hydrogen fuel blend in the future, which could provide future environmental benefits,” Mark Zhu, managing director at Blackstone Energy Transition Partners, noted.
The Potomac Energy Center, originally known as the Panda Stonewall project, was built near Leesburg and completed in 2017. In roughly the same time period, more than 30 million square feet of data center facilities have been built in Loudoun County, according to reports.
Data center Expansion Driving Energy Worries
Last August, at the inaugural Data Center Frontier Trends Summit in Reston, Va., data center and energy experts fretted over the data center growth challenges facing the nation’s electricity generation sector. It’s worth recalling that many utility forecasters were predicting flat load growth only about five years ago.
“We don’t have all the answers yet,” Vance Peterson, global solutions architect at Schneider Electric, said during the keynote at the Data Center Frontier Trends Summit. “My crystal ball tells me we’ve got to find those answers.”
Among those potential solutions include carbon-free renewable energy and nuclear power, with tech giants such as Microsoft, Google and Amazon Web Services investing in both future small and current conventional nuclear power plants to shore up anticipated energy needs and deliver on net zero emissions goals.
At the same time, the United States is experiencing a historic rise in natural gas production, with shale play producers delivering so much that the nation is now the world’s largest exporter of liquified natural gas. Domestic gas drilling is currently delivering more than 80 billion cubic feet of shale gas per day, according to the federal Energy Information Administration.
Burning natural gas to generate electricity does emit greenhouse gases, but only half the level of carbon dioxide produced by coal-fired generation. Natural gas currently accounts for close to 40% of the total U.S. utility-scale electricity resource mix.
