Wall Street Journal – Sandbrook and NGP Pledge $300 Million to Data-Center Power Infrastructure Developer (Exclusive article that led the coverage)
By Luis Garcia
July 17, 2024

The private-equity firms committed $150 million apiece to Cloverleaf Infrastructure, which helps data centers secure clean-energy power supplies

Cloverleaf Infrastructure helps data centers access renewable power sources.

Sandbrook Capital and NGP Energy Capital have pledged a total $300 million to Cloverleaf Infrastructure, a newly formed business that helps data centers access renewable power. These days, this often includes helping overburdened utilities find new ways to provide that power.

Houston-based Cloverleaf will use the capital to buy land and develop energy infrastructure, such as power generators and transmission lines as well as grid-interconnection and battery systems that facilitate the supply of renewable electricity to data centers. Private-equity firms Sandbrook and NGP each committed $150 million to the new business, said Alfredo Marti, a partner and co-founder at Stamford, Conn.-based Sandbrook.

Across the U.S., demand for electricity has grown rapidly to power artificial intelligence systems and meet demands stemming from reshoring of manufacturing. That demand growth strains utilities accustomed to decades of steady power consumption in the country. U.S. total electricity demand has hovered around 4,000 terawatt-hours since 2010, but it is expected to increase to nearly 4,500 terawatt-hours through 2030, driven mostly by the data-center and transportation sectors, according to Rystad Energy, an energy-focused consulting firm.

The rising demand is creating opportunities for private equity-backed businesses to help utilities develop power infrastructure faster, Marti said.

“Utilities are built to think in a very long time horizon and work on large, but slow changes,” he said. “We can make capital decisions much faster than the utilities can. For example, if there’s a new transmission line or a new piece of equipment that will solve a bottleneck in a particular region, we can do that.”

Marti cited the experience Cloverleaf founders have in the power and data-center sectors as well as in government as another factor that can benefit utilities. Chief Executive David Berry previously worked at power transmission developer Clean Line Energy Partners and renewable- energy company ConnectGen. Meanwhile, Chief Commercial Officer Brian Janous served as vice president of energy at Microsoft, where he was responsible for helping the technology giant’s data centers secure power supplies. Jonathan Abebe, Cloverleaf’s third co-founder, held technical advisory roles at the U.S. Department of Energy and also worked at Clean Line and wind developer Pattern Energy. He serves as Cloverleaf’s chief technical officer.

Cloverleaf recently spoke with power utilities not only about new infrastructure, but how they can make the most of their existing assets, Janous said. He mentioned so-called grid-enhancing technologies such as dynamic line rating, which enables operators to adjust the maximum amount of electricity that can flow through a transmission line based on weather conditions, freeing them of fixed, often conservative ratings. Such technologies can reduce utilities’ reliance on fossil-fuel-fired power plants to meet surging demand, something crucial to attract corporate customers committed to clean-energy goals, he said.

Cloverleaf expects to benefit from a relative lack of familiarity with the power sector among data- center developers, most of which have roots in the real estate and fiber-optics sectors, Janous said.

“Most of the expertise in this industry has been built on the back of people that understand fiber networks because if you go back to the beginning of this industry, in the mid-2000s to 2010, everything was about fiber,” he said of data centers. A desire to be close to fiber networks led data centers to concentrate in Northern Virginia, one of the largest U.S. fiber hubs, Janous said.

A sudden shift in priorities to power from fiber is driving the development of large data centers in states such as Wisconsin, Ohio and Indiana, where renewable power is more abundant, Janous said. Cloverleaf is also focusing on those areas, he added.

“One of the questions we get asked a lot is, ‘Where do the new, hyperscale data centers want to be?’” he said. “The answer is quite simple. It’s where the power is.”