UK's National Grid bets $1.75 billion on AI power boom with Joulent investment
National Grid's Strategic Investment in Joulent and the AI Energy Surge
Overview of the Investment
July 1 (Reuters) - Britain's National Grid said on Wednesday it will invest $1.75 billion for a 35% stake in Joulent, a U.S. energy platform developing power infrastructure for data centres, as it seeks to tap into surging AI-driven demand for electricity.
Details of the Joulent Project
First Project and Key Partnerships
The deal will help fund Joulent's first project, a 2.67-gigawatt gas-fired facility in West Texas developed in a 50/50 partnership with Chevron, which will supply a Microsoft-operated data centre campus under a 20-year power purchase agreement.
Market Reaction
National Grid shares fell 1.4% to trade at 1,230.5 pence by 1142 GMT.
AI-Driven Electricity Demand
Global Trends
AI-related electricity demand is reshaping energy markets globally. Demand from data centres that power generative artificial intelligence services rose by 17% in 2025, far outpacing the 3% growth in overall global electricity demand.
Financial and Strategic Implications
Investment Funding and Impact
National Grid said the investment was incremental to its existing five-year capital investment programme of at least £70 billion through fiscal year 2031 and would be funded through available capacity on its balance sheet. The transaction was not expected to affect its current financial status, the company said.
Expected Returns
Analyst Insights
"We would expect the targeted returns of this investment through National Grid Ventures to exceed the 9-10% return on equity we expect regulated networks to achieve, reflecting a slightly higher relative risk profile," J.P. Morgan analysts said in a note.
Future Outlook and Expansion
Data Centre Connections and Project Timeline
National Grid said the strategic partnership would also strengthen its existing data centre connection programme, where it expects to connect more than 10 gigawatts across the UK and the United States over the next five years.
Project Kilby and Equipment Procurement
Known as Kilby, the project has already secured critical equipment, including GE Vernova turbines and reserved engineering and construction capacity, and is aiming to start delivering power by 2028.
Financial Projections and Decision Timeline
Joulent is expected to be free cash flow positive from the early 2030s, National Grid said. A final investment decision on the Joulent stake is expected by the end of 2026.
(Reporting by DhanushVignesh Babu in Bengaluru; Editing by Jonathan Ananda and Emelia Sithole-Matarise)