Business

Private equity giants invest $50B to help scale data center, power generation infrastructure

The strategic partnership merges KKR’s expertise in digital infrastructure, power, and the energy value chain with Energy Capital Partners’ platform in electrification and renewable energy.
Private equity giants invest $50B to help scale data center, power generation infrastructure
(Data Center Control Room. Image by Akela999 from Pixabay. )

KKR, a global investment firm, and Energy Capital Partners (ECP), announced a $50 billion investment with the aim of accelerating the development of data center and power generation and transmission infrastructure driven by the rapid expansion of artificial intelligence (AI) and cloud computing.

This strategic partnership combines KKR’s experiences in digital infrastructure, power and the energy value chain with ECP’s energy transition platform in electrification and power and renewable generation.

The strategic partnership is intended to deliver scaled data center and power solutions for hyperscalers and other market participants to support their infrastructure needs across geographies to drive model training, tuning, and inferencing at scale. KKR and ECP plan to engage with industry leaders including utilities, power and data center developers, and independent power producers to accelerate the delivery of data center campuses required by hyperscalers.

KKR is funding the strategic partnership from existing infrastructure and real estate strategies and insurance accounts managed by the firm. ECP is funding the strategic partnership from existing and future infrastructure capital pools.

“Data center power demand is expected to grow by 160% by 2030, a demand that will go unmet without the right infrastructure in place, which is critical to boosting productivity, supporting electrification and helping countries create a competitive edge in AI,” said Joe Bae, Co-Chief Executive Officer, KKR.

To date, KKR has invested more than $29 billion across 22 investments in relevant digital infrastructure companies across data centers and fiber, as well as $15 billion in power, utilities and energy. KKR’s global data center footprint spans four platforms with several GW of deployed assets across over 100 facilities and more under development globally. KKR’s portfolio also includes over 10 renewable energy developers with over 50 GW of global development pipeline.

ECP has owned, controlled, and operated over 83 GW of power generation across all major U.S. power markets, spanning a variety of technologies including natural gas, geothermal, hydro, solar, wind, battery storage and waste-to-energy since its founding in 2005. ECP is also the majority owner of an aeroderivative power turbine platform and manufacturer, ProEnergy, which the companies say will provide an important link in accelerating the delivery of electricity to data center projects.

After years of flat load growth on the U.S. grid, electricity demand is rising due to numerous factors – notably industrial onshoring, widespread electrification and the adoption of AI data centers.

According to a recent EPRI white paper, electricity usage by hyperscalers more than doubled between 2017 and 2021. This increase is expected to continue, with data centers projected to consume 5% to 9% of U.S. electricity generation annually by 2030, up from 4% today. Demand for computing power from data centers, fueled by artificial intelligence and other new technologies, requires enormous amounts of power. 

In the U.S., data center demand is expected to reach 35 GW by 2030, up from 17 GW in 2022, McKinsey & Company projects. 

According to EPRI, 15 states accounted for 80% of data center capacity in 2023, led by Virginia, Texas, California, Illinois, Oregon, and Arizona. That concentration creates economic opportunities for states hosting data centers, but could also stress the grid.