A division of investment management giant Blackstone plans to buy a power plant in Virginia located near more than 100 data centers that consume gobs of energy.
Blackstone Energy Transition Partners agreed to purchase Potomac Energy Center, a 774-megawatt natural gas power plant in Loudoun County, Virginia, the group announced Friday. The Potomac plant is located near more than 130 data centers, "with significant further growth expected," Blackstone said.
The roughly 2.28 million-square-foot location was built in 2017 and is owned by Ares Management, according to CoStar data. Ares declined to comment on the transaction.
Blackstone is paying approximately $1 billion for the facility, according to a party involved in the deal.
The massive amount of energy consumed by data centers has prompted concern in communities across the country and prompted some companies to build or buy their own power plants.
“This investment underscores Blackstone’s commitment to investing in the electric infrastructure required to power AI innovation,” said Bilal Khan, senior managing director at Blackstone Energy Transition Partners, in a statement. “We believe Potomac is well-positioned to help meet data center-driven power demand growth in Northern Virginia," he continued.
The transaction in Northern Virginia, the world’s largest data center market, represents Blackstone’s most recent investment planned in the sector. Blackstone said the Northern Virginia market "currently represents approximately 25 percent of U.S. data center capacity."
In September, CoStar reported Blackstone joined a partnership to buy AirTrunk, an Asia-Pacific data center operator, for a deal valued at $22 billion.
Data centers account for nearly 40% of the industrial supply delivered to the Washington, D.C., market since 2020, according to a CoStar market report.
Given that growth, concern over the power requirements of data centers in Virginia has been rising, with the local legislature releasing a report in December highlighting the surge in the facilities could lead to higher utility costs for residents of the commonwealth.
For the record
Santander and Jefferies LLC assisted Blackstone on this transaction.