Blackstone’s energy investment unit has agreed to purchase the Potomac Energy Center from Ares Management.

First reported by Reuters, Blackstone Energy Transition Partners will acquire the 774MW natural gas plant in Loudoun County, Northern Virginia.

While no financial details on the transaction were shared, sources close to the deal reported that the plant will cost the asset manager $1 billion.

The power plant is located at the heart of Northern Virginia, the world's largest data center market which is home to a quarter of all US data center capacity. This was apparently a major factor in the acquisition.

"This opportunity is unique," Blackstone Energy Transition Partners senior managing director Bilal Khan told Reuters. "Not only for its location and its unparalleled access to data centers in Virginia but also for the efficiency of the plant and the young age of the facility."

Located south of Leesburg, Virginia, the plant reached commercial operations in 2017.

The growth of artificial intelligence is leading to unprecedented energy demand for data center operators. As a result, power assets, especially natural gas, have become a hot commodity for investors. These assets are crucial for data centers that require stable 24/7 power for their operations.

At the beginning of the month, Constellation Energy agreed to acquire Calpine Energy for $26.6 billion, including debt considerations. Calpine is the largest generator of electricity from natural gas and geothermal resources in the US. It operates a fleet of 79 energy facilities with a generating capacity of more than 2.7GW.

However, there are concerns that unconstrained data center growth in Northern Virginia could ultimately outstrip the power supply. A report released last year by Virginia’s Joint Legislative Audit and Review Commission claimed that a new 1.5GW natural gas plant would be needed every two years for 15 consecutive years to meet the state's data center demand.

Blackstone, the world's largest asset manager, has made several other notable acquisitions in the data center space over the past 12 months. In September, the asset manager acquired APAC data center firm AirTrunk for $16.1 billion, which was the largest-ever deal in the space. It says its data center pipeline is worth a potential $100 billion.