KKR and Energy Capital Partners Announce $50 Billion Strategic Partnership to Support AI Growth Through Investments in Data Centers and Power Generation

Business Wire 30-Oct-2024 7:00 AM

Strategic partnership with available capital and scale ready to meet the urgent need to fund data center, power, and grid infrastructure in the U.S. and globally

Scaling of AI and cloud infrastructure in the U.S. expected to cost at least $1 trillion by 2030

KKR, a leading global investment firm, and Energy Capital Partners ("ECP"), the largest private owner of power generation and renewables in the U.S., today announced a $50 billion strategic partnership. The collaboration aims to accelerate the development of data center and power generation and transmission infrastructure for the rapid expansion of artificial intelligence (AI) and cloud computing globally. This strategic partnership combines KKR's deep expertise in digital infrastructure, power, and the energy value chain with ECP's premier energy transition platform in electrification and power and renewable generation.

Advancements in AI are fueling an unprecedented demand for data centers, but a limited availability of reliable power is impeding the strategic goals of the world's largest technology companies, enterprises, and governments looking to deploy AI. U.S. data center demand is projected to nearly triple by 2030, driving over $1 trillion in investment¹. A single planned data center campus regularly exceeds 1 gigawatt (GW) of power demand and requires an investment of $15 billion or more across data center and power equipment.

"Data center power demand is expected to grow by 160% by 2030², a demand that will go unmet without the right infrastructure in place, which is critical to boosting productivity, supporting electrification and helping countries create a competitive edge in AI. At the same time, the scaling of this mission-critical infrastructure must be done affordably, reliably, and sustainably, while addressing the needs of all stakeholders – from technology companies to end consumers," said Joe Bae, Co-Chief Executive Officer, KKR.

"In order for the U.S. to maintain its advantage in AI, we will need massive new investments in power infrastructure on an accelerated basis that are capable of addressing concerns related to electricity prices and carbon emissions," said Doug Kimmelman, Founder and Senior Partner, ECP. "We are committed to delivering solutions for our strategic partners and our investors through ECP's strong utility relationships and expertise investing across a wide variety of power generation, renewable, and battery storage assets."

"Building out AI and power infrastructure will require collaboration across industries. KKR and ECP's strategic partnership offers a new approach, with immediately available capital and the capabilities needed to deploy that capital to accelerate this effort. With our combined footprint and capabilities, we have a more than 8 GW existing datacenter pipeline, 100 GW of currently operating and development-ready power generation, and significant experience working with stakeholders across both industries to help realize this opportunity quickly and responsibly," said Waldemar Szlezak, Partner and Global Head of Digital Infrastructure, KKR.

"The ECP and KKR teams have decades of experience working with constituents to bring infrastructure projects to completion on time and on budget," said Tyler Reeder, Managing Partner, ECP. "This experience, along with ECP's existing power and renewable asset base, history of decarbonizing existing assets through carbon capture and asset repowering, as well as KKR's leading digital practice, provide our partners a clear path to delivering much needed computing capacity through a sustainable lens."

The strategic partnership is designed to deliver scaled data center and power solutions for hyperscalers and other market participants to support their infrastructure needs across geographies to drive model training, tuning, and inferencing at scale. KKR and ECP plan to engage with industry leaders including utilities, power and data center developers, and independent power producers to accelerate the delivery of data center campuses required by hyperscalers.

"To develop a winning solution to support the growth of AI in the U.S., you need world-class capabilities along every step of the value chain – including power generation, transition, and deployment within data centers to serve hyperscalers and other market participants. With KKR and ECP's industry-leading solutions in data center development, power, renewables, and capital formation, this partnership is bringing to bear the best of the best to accelerate the build out of AI," said Neil Chatterjee, former FERC Chairman, Senior Advisor to KKR, and Board Member of ECP-owned Convergent Energy.

KKR is funding the strategic partnership from existing infrastructure and real estate strategies and insurance accounts managed by KKR. ECP is funding the strategic partnership from existing and future infrastructure capital pools.

KKR first established its global infrastructure team and strategy in 2008 and has since been one of the most active infrastructure investors around the world with $77 billion in infrastructure assets under management as of September 30, 2024. To date, KKR has invested more than $29 billion across 22 investments in relevant digital infrastructure companies across data centers and fiber, as well as $15 billion in power, utilities, and energy. KKR's significant global data center footprint spans four platforms with several GW of deployed assets across over 100 facilities and more under development globally. KKR's portfolio also includes over 10 renewable energy developers with over 50 GW of global development pipeline.

ECP has owned, controlled, and operated over 83 GW of power generation across all major U.S. power markets, spanning a variety of technologies including natural gas, geothermal, hydro, solar, wind, battery storage, and waste-to-energy since its founding in 2005. The ECP team, comprised of 90 people with 800 years of collective industry experience, deep expertise, and extensive relationships, has completed more than 100 equity transactions (representing nearly $60 billion of enterprise value), the majority of which have been focused on power and renewables. In addition to being the largest private owner of power and renewable generation assets in the U.S. through companies like Calpine, ECP is also the majority owner of an aeroderivative power turbine platform and manufacturer, ProEnergy, which will provide an important link in accelerating the delivery of electricity to data center projects.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR's insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR's investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE:KKR), please visit KKR's website at. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group's website at www.globalatlantic.com.

About Energy Capital Partners

Energy Capital Partners (ECP), founded in 2005, is a leading investment firm across energy transition infrastructure, with a focus on investing in electricity and sustainability infrastructure providing reliable, affordable and clean energy. Earlier this year, ECP combined with Bridgepoint Group to form a global leader in value-add middle-market investing, with a combined $73 billion of assets under management across private equity, credit, and infrastructure. For more information, visit www.ecpgp.com and www.bridgepoint.eu.

¹ Goldman Sachs Global Macro Research Report, "Top of Mind," 25 June 2024. ² Goldman Sachs Equity Research Report, "AI, data centers and the coming US power demand surge," 28 April 2024.

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