Financial sponsors are broadening their hunt for artificial intelligence-linked investments beyond data centers, targeting power generation, utilities, transmission infrastructure, and renewable energy platforms as electricity demand surges.

Sponsors are targeting these investment opportunities through joint ventures, minority stakes, asset-level partnerships, and selective control transactions, said Harry Seekings, partner, chair of Apollo Infrastructure Group and Head of Infrastructure Equity.

This news service recently reported that Apollo’s infrastructure investment arm is evaluating opportunities across transmission and grid infrastructure, natural gas infrastructure, fiber networks, cooling systems, and behind-the-meter power generation solutions.

Utilities face a “seismic” increase in power demand after a major shift in the market over the past 18-24 months, said Keith Derman, partner and head of Ares Infrastructure Equity. He said meeting that demand will require significant investment in power generation, transmission, grid reliability, and other infrastructure.

Grid investments move to forefront

Stonepeak and Bernhard Capital Partners highlighted grid resiliency and reliability when they announced their pending USD 5.7bn acquisition of Pineville, Louisiana-based regulated utility Cleco in April.

Duke Energy similarly cited transmission and distribution enhancements when it announced Brookfield Asset Management’s USD 6bn investment in the company for a 19.7% stake.

The data center buildout has certainly been a major driver behind the surge in power demand, but the country’s electricity grid is also being stressed by overall electrification, reshoring and broader industrial growth, Seekings said.

Renewables remain in focus

In May, clean energy-focused sponsor FH Capital agreed to acquire a 75.1% stake in JinkoSolar’s subsidiary in the US for USD 192m with the aim to at least double the company’s solar module production capacity in the US and initiate battery energy storage system (BESS) manufacturing.

JinkoSolar in March announced the launch of a new hybrid clean power module specifically designed for data centers.

Financial sponsors also continue to pursue investments in clean energy generation.

President Donald Trump’s One Big Beautiful Bill, which sunsets tax credits for renewable projects, has accelerated activity in the sector, “as developers have been sprinting to get as many projects built and qualified as they can,” Derman said.

He added that macroeconomic uncertainty has reduced capital for some development platform deals, while strengthening pricing power for established managers.

“In renewables, we think scale is becoming more important than growth for growth’s sake,” said Dave Cohen, a partner at Apollo Infrastructure Group.

Last year, Energy Capital Partners formed a 50-50 joint venture with Abu Dhabi’s active sovereign investment firm ADQ to build new power generation and energy infrastructure. The firms plan to make total capital investments of more than USD 25bn across 25 GW of projects, according to a press release.

Cerberus Capital Management, for its part, partnered with Ecos Energy Enterprises and committed USD 100m to launch Frontier Power USA, a purpose-built independent development and investment company that will build, own, and operate a portfolio of long-duration battery energy storage projects.

Behind-the-meter gains traction

Financial sponsors are also invested in behind-the-meter opportunities, said Adam Cieply, partner in White & Case’s M&A practice. “[This is] not solely being driven by AI demand but also based on the need and desire to have energy independence by a relatively inexpensive and rapidly deployed form of generation,” he said.

Behind-the-meter generation and storage systems are located on the customer’s side of the utility meter, supplying electricity directly rather than sending power through the public grid.

Funds managed by Blackstone Tactical Opportunities and Haliburton in May agreed to invest USD 1bn in VoltaGrid to accelerate the company’s deployment of behind-the-meter power generation solutions for data centers, microgrids, and industrial applications.

“Sponsors are looking for every value creation opportunity in generation that is available,” Cieply said.

In May, Star Catcher Industries, which is building the first power grid in space, raised USD 65m in an oversubscribed Series A round led by B Capital and co-led by Shield Capital and Cerberus Ventures.