Private Equity’s Power Play: From Bankrolling AI to Seizing the Energy That Keeps It Running

Wall Street's latest pivot cuts straight to the power grid.

The Energy Grab

Private equity firms aren't just funding AI startups anymore—they're bypassing the middleman to secure the electricity that makes artificial intelligence possible. These funds now target data centers, power plants, and energy infrastructure with the same zeal they once reserved for tech unicorns.

Power becomes the new currency in the AI arms race. Firms that once competed on algorithm quality now battle for megawatt capacity. The shift reveals a cynical truth in finance: when everyone's betting on the same technology, the real money moves to whatever scarce resource that technology consumes.

Energy contracts get rewritten, grid operators face unprecedented demand, and the physical world suddenly matters again in digital transformation. The move exposes AI's dirty secret—it runs on old-fashioned electricity, and there's never enough to go around.

So while VCs chase AI software returns, private equity quietly corners the market on what actually makes it run. Typical finance—always finding a way to charge rent on the future.

Blackstone targets utilities while Minnesota fight escalates

Blackstone is pushing regulators to approve its purchase of both Public Service Company of New Mexico and Texas New Mexico Power, based in Albuquerque and Lewisville. Wisconsin has already cleared the sale of Superior Water, Light and Power, and last year, Northern Indiana Public Service Company sold a 19.9% stake to Blackstone.

But in Minnesota, things are far messier. A major fight is unfolding over whether BlackRock, through one of its subsidiaries, can team up with the Canada Pension Plan Investment Board to take over Allete, the parent company of Minnesota Power. That utility provides electricity to 150,000 customers and runs a mix of coal, gas, wind, and solar power.

This isn’t just another transaction. Google might be building a data center in the area, and whoever controls Minnesota Power stands to make serious money from feeding power to it. The proposed $6.2 billion deal offers $67 per share, a 19% premium to Allete’s stockholders.

Allete claims this deal helps them hit Minnesota’s 2040 law requiring utilities to use 100% carbon-free power. They estimate needing $4.3 billion for grid and clean energy projects in the next five years. They also argue that BlackRock isn’t under short-term stock market pressure and can take a more “patient” approach.

Opposition slams deal as profit play on ratepayers

Not everyone’s on board. Critics say the whole thing is just a profit scheme. Karlee Weinmann, a policy advocate at the Energy and Policy Institute, said, “Private equity is extremely aggressive in chasing profits, and when it comes to utilities, the profit motive lands squarely on the backs of ratepayers who don’t have a choice.”

Mark Ellis, a former utility exec turned consumer advocate, testified against the deal. Mark said he’s personally talked to private equity firms looking to jump into utility ownership. “It’s just a matter of what’s the price and will the regulator approve it,” he said. He added these companies don’t come up for sale often, but when they do, they’re golden.

Utilities generate about 10% returns, not by selling power, but by spending money. The more they invest in substations, poles, and wires, the more they can charge customers under rules set by regulators. That’s where critics say the danger lies, the incentive is to overspend so investors can overcharge.

This fight over Minnesota Power mirrors battles in other parts of America, where people are pushing back against having data centers built NEAR their homes. In this case, Gov. Tim Walz and building trades unions support the buyout.

But the Minnesota Attorney General’s office and large industrial power buyers (like U.S. Steel, Enbridge, and pulp and paper mills) are pushing against it. These industrial players use two-thirds of Minnesota Power’s electricity.

In its filing, Allete insisted that BlackRock’s ownership wouldn’t change its operations or strategy, and promised the deal wouldn’t raise rates. But filings with the Securities and Exchange Commission show Allete already said it was “well positioned” to meet its funding needs without new owners.

Things got even worse for BlackRock in July, when Administrative Law Judge Megan McKenzie told regulators to block the deal. She said the record showed the buyers plan to do what private equity always does — “pursue profit in excess of public markets through company control.”

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