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Blackstone Acquires $1B Power Plant Near Virginia Data Centers

Blackstone's energy investment unit has made a significant move in the power sector, agreeing to acquire the Potomac Energy Center in a deal that underscores the growing appeal of power plants located near data centers. The asset manager announced on Thursday that Blackstone Energy Transition Partners will purchase the 774-megawatt natural gas-fired power plant situated in Loudoun County, northern Virginia.

While the official statement did not disclose financial details, sources familiar with the transaction told Reuters that Blackstone is set to pay approximately $1 billion for the facility. The power plant, previously owned by Ares Management since 2021, is strategically located in an area estimated to host about a quarter of the current U.S. data center capacity.

Bilal Khan, senior managing director at Blackstone Energy Transition Partners, pointed to the unique attributes of this acquisition. "This opportunity is unique," Khan told Reuters. "Not only for its location and its unparalleled access to data centers in Virginia, but also for the efficiency of the plant and the young age of the facility." The Potomac Energy Center, constructed in 2017, is relatively new in the power generation landscape.

The purchase reflects the surging power demands driven by the artificial intelligence boom and the rapid expansion of data centers. Industry experts anticipate this growth trend to continue throughout the decade, making generation assets increasingly attractive to investors. Gas-fired power plants, in particular, are gaining attention due to their ability to provide the consistent power output required by data centers.

This acquisition is part of a broader trend in the energy sector. Earlier this month, Constellation Energy agreed to make a $16.4 billion purchase of Calpine, marking the largest U.S. power deal in nearly two decades. The move aims to integrate Calpine's predominantly gas-fired fleet with Constellation's existing generation mix, which is primarily nuclear power.

Blackstone's investment strategy extends beyond just power generation. The firm has been actively investing in both data centers and the energy infrastructure that supports them. In September, Blackstone agreed to a $16 billion deal to acquire Australian data center operator AirTrunk. Additionally, AI cloud platform CoreWeave secured a $7.5 billion debt facility in May, with Blackstone among the participating investment firms.

Reprinted with permission from the Friday, 24 January 2025 07:02:44 EST online edition of GlobeSt © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.