ArcLight invests $500 million in wind and solar energy to meet AI demand

ArcLight invests $0 million in wind and solar energy to meet AI demand

(Bloomberg) — ArcLight Capital Partners, a leading private equity buyer of energy assets, has launched a new unit with $500 million in seed funding to acquire and upgrade wind and solar projects to meet growing demand for electricity from data centers.

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

Even as environmental, social and governance investments come under scrutiny, private equity funds see opportunities to profit from the transition to cleaner energy. Artificial intelligence and electric vehicles are expected to dramatically increase demand for low-carbon energy.

“There’s a huge demand for electrification with the rise of AI and data centers, so we see an interesting opportunity here to retrofit and repower long-standing factories to create additional green energy,” said Dan Revers, founder and managing partner of ArcLight, in an interview.

Innovations in upgrading existing wind and solar power plants are one way to reduce 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.