ArcLight to Invest $500 Million in Wind and Solar to Meet AI Demand

(Bloomberg) -- ArcLight Capital Partners, a major private equity buyer of power assets, launched a new unit with initial capital of $500 million to acquire and upgrade wind and solar projects that will help meet surging electricity demand from data centers. 

The investment vehicle, SkyVest Renewables, made its debut deal with the purchase of a 160-megawatt wind farm in the Permian Basin of West Texas. The company didn’t disclose what it paid for the project, which has been operating for four years. ArcLight said it expects to spend a third to half of the initial SkyVest capital commitment this year and the rest in 2025.

Even as environmental, social and governance investing comes under scrutiny, private equity funds are seeing opportunities to profit from the transition to cleaner energy. Artificial intelligence and electric vehicles are expected to drive a dramatic increase in the demand for low-carbon power.

“There’s a huge demand just in terms of electrification with AI coming on and data centers, so we see an interesting opportunity here with plants that have been around for a long time to refurbish and repower them to create additional new green energy,” Dan Revers, ArcLight founder and managing partner, said in an interview. 

Innovations in upgrading existing wind and solar plants are a way to drive down costs and stay competitive, Revers said. SkyVest has other large deals in the pipeline, with rising energy consumption presenting an opportunity to raise more capital in the future, he said. 

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