Silver Lake Invests $400 Million to Tackle Data-Center Power Bottleneck

Wall Street Journal

5 days ago

Private-equity firm Silver Lake is expected to announce Friday a $400 million project aimed at securing powered land it will sell to data-center developers and hyperscalers.
The new platform is a joint venture between Silver Lake and Adam Fisher and Peter Rumbold, principals at Commonwealth Asset Management, who have invested in data-center land projects for nearly a decade.
The joint venture said it has already secured 3 gigawatts of power and is developing sites in Texas and Georgia. The partners said they expect this phase of the project ultimately will result in securing over 6 gigawatts in various sites across North America, by leveraging both relationships with utility providers and in some instances by building their own power generation.
Silver Lake Managing Director Lee Wittlinger said the approach is different from how data centers were developed in the past, which typically involved first buying land and then looking to secure the needed power. Obtaining the required power in a major data-center hub is no longer a given, he said.
A boom in artificial intelligence and surging demand for data centers has upended the business of utilities, power producers and grid planners, who had been living in a world of nearly flat electricity demand for roughly two decades. Trends suggest that by 2030, data centers for training the largest AI models are projected to require over 5 gigawatts of electricity, roughly equivalent to Manhattan's average peak consumption, according to the nonprofit research group Epoch AI.
OpenAI, which launched its most advanced model Thursday, recently struck a data-center deal with Oracle that totals 4.5 gigawatts of capacity. The data centers are spread among locations around the U.S., people familiar with the deal told The Wall Street Journal.
'The real limiter at this point on all of that isn't: can you get the GPUs from Nvidia or others, or can you actually find the money,' Wittlinger said, adding, 'the real limiter is really power.'
Fisher, who is the founder and chief investment officer of Commonwealth, said he's taking a three-pronged approach to securing land with the necessary power requirements.
The first involves finding land parcels and then sussing out power capacity from the utilities before making the purchase. Fisher said this is a common approach across the industry right now, but that the chances of success are slim.
The second approach requires building power generation from the ground up, mainly with natural gas generators, as the joint venture is doing in Texas. There's still some work to be done with the utilities in that case, since data centers need to be connected to the grid for backup, he said.
The third involves working with the utilities to identify areas where there's excess power, and then finding land parcels in those areas. Fisher said Georgia, Texas and Pennsylvania are attractive areas here because they have a lot of natural gas.
Wittlinger said Silver Lake has put over $5 billion into the AI infrastructure category. It made the initial investment that ultimately led to the creation of data-center developer Vantage Data Centers 15 years ago.
He says he has confidence in how this new platform can scale and is looking forward to putting more capital behind it as it gets more traction. 'That is our hope. And as of this moment, our expectation,' he said.
Write to Isabelle Bousquette at [e-mail]