US Data centre boom drives energy investments focused on resilience

The US energy sector is undergoing a significant shift, driven by surging electricity demand from the rapid expansion of digital infrastructure. In particular, the rise of generative artificial intelligence (AI) is fueling an unprecedented increase in power needs — and private equity investors are viewing this demand as a source of confidence for investing in certain US energy companies, assets, sectors, and services.

By Bill Swanstrom, Partner at Troutman Pepper Locke

Home to nearly half of the world’s data centres, the US has seen electricity demand from this sector double over the past four years — reaching 40GW by the end of 2024, with projections to more than double again to 81GW by 2028.

Much of this is being driven by big tech firms — the likes of Amazon, Google, Meta, and Microsoft — which collectively account for around 75% of the US corporate electricity offtake market.

Prioritising reliability

Data centres rely on 24/7 power — even brief disruptions risk critical service outages and financial and reputational repercussions. A typical data centre load profile shows a relatively constant baseload with peaks driven by cooling needs, which often aligns well with solar generation.

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However, meeting the constant demand requires an "all of the above" approach, with an emphasis shifting away from singular technologies towards scalable, resilient power sources capable of delivering a continuous and unbroken supply.

While wind and solar play an important role in powering data centres, their intermittency, tied to weather and daylight dependency, means they can’t always meet the full scope of around-the-clock demand on their own. To bridge this gap, conventional sources such as gas and nuclear are expected to play an expanded role, and private equity is backing this diversified strategy.

Many companies are co-locating data centres near nuclear plants to ensure direct access to uninterrupted energy. These sources offer the reliability required to keep pace with the speed and scale at which new centers are being developed. With strong policy support, they are also becoming more viable as low-carbon solutions. Geothermal is emerging as a potential contributor, too, although its long-term role remains uncertain.

Aligning capital with long-term resilience

Private equity is supporting this growth with a focus on resilience and insulation from political swings. This aligns with the Trump administration’s renewed focus on reliability over climate subsidies — most recently reflected in the sweeping tax and spending package, dubbed the ‘One Big Beautiful Bill’ (OBBB).

While not directly targeting AI, the bill includes provisions that support its infrastructure development, such as accelerated tax treatment for capital investment in data centres and incentives for on-site clean energy generation.

However, the OBBB also accelerates the phaseout of renewable energy tax credits, which, under the Inflation Reduction Act, previously provided projects with over a decade of financial certainty. This shift could reshape financing dynamics and contribute to rising electricity costs as competition intensifies for reliable power.

Also of interest: Google signs three-site nuclear deal with Elementl Power

The long-term trend of rising electricity demand extends beyond digital infrastructure. As digital technologies become further integrated into everyday life and across sectors, from transportation to manufacturing to health care, energy consumption per capita continues to climb, and investors are seeing 24/7 power as a key investment theme.

Capital is now being directed toward assets that can satisfy long-term structural demand, offer operational resilience, and withstand shifting political priorities at both state and federal levels.

As energy and digital infrastructure increasingly converge, private equity investors are focusing their capital and resources on resilience, optionality, and 24/7 reliability.

(Selected findings drawn from the recent Troutman Pepper Locke report: Top Five Private Equity Investment Trends in US Energy)

ABOUT THE AUTHOR

With more than 30 years of experience leading energy transactions, Bill Swanstrom is a trusted advisor for complex mergers, acquisitions, and private equity activities in the energy sector.