Jersey shores up energy relations with $25 billion UAE partnership to power US data centers

New Jersey-based Energy Capital Partners and UAE‘s ADQ are launching a massive $25 billion partnership focused on developing power generation projects for data centers across the United States. This collaboration addresses the surging energy demands driven by AI technology and cloud computing, which could consume up to 12% of total U.S. electricity by 2028. The venture represents a strategic response to what experts predict will be a tripling of data center power needs by 2030, requiring over $1 trillion in investment to meet this growing infrastructure challenge.

The big picture: Energy Capital Partners (ECP) and Abu Dhabi sovereign wealth fund ADQ are forming a joint venture to develop up to 25 GW of power generation capacity, primarily targeting the explosive growth in U.S. data center energy consumption.

• The partnership begins with a $5 billion initial capital commitment from both partners, with plans to eventually invest up to $25 billion in power generation and energy infrastructure.
• The investment strategy prioritizes new development projects, including greenfield sites, new builds, and expansion of existing facilities to meet the electricity demands from AI-powered cloud computing.

Key details: Doug Kimmelman, ECP’s founder and executive chairman, emphasized the venture will focus on building new natural gas-fired power generation to support “hyperscalers” like Amazon and Google.

• “AI will be a major driver of U.S. economic and job growth over the coming decade, but not unless ample new electricity supplies are developed,” Kimmelman said in a statement.
• Founded in 2005, ECP brings significant experience to the venture, having owned and operated more than 83 GW of diverse power generation across U.S. energy markets.

Important stats: U.S. data centers are rapidly becoming major electricity consumers, with demand projected to nearly triple by the end of the decade.

• Data centers consumed 4.4% of total U.S. electricity in 2023, according to a December U.S. Department of Energy report.
• This figure could jump to 12% by 2028, driven largely by the power-intensive computing requirements of advanced AI systems.
• The American Public Power Association estimates these growth trends will drive more than $1 trillion in investment to meet data center energy needs by 2030.

Behind the numbers: This announcement follows ECP’s recent $50 billion strategic partnership with global investment firm KKR, also aimed at developing infrastructure to support the AI and cloud computing sectors.

• Both partnerships reflect the urgent need for massive capital deployment to prevent energy shortages as data processing demands surge across the United States.
• The focus on natural gas generation suggests these companies view fossil fuels as a necessary component of the near-term solution to data center energy challenges, despite broader decarbonization efforts in the energy sector.