BROOKFIELD Asset Management agreed to spend US$1.7 billion in a deal to expand its US onshore renewables business as the company bets there will be increasing demand for electricity from data centres and artificial intelligence (AI).
The transaction with the UK’s National Grid indicates investors are still confident in robust power consumption growth from technology companies, despite concerns that computing needs may be lower than some expect and that AI such as China’s DeepSeek requires less energy.
The agreement with National Grid gives Brookfield a portfolio of operating projects and others in advanced stages of development. It follows a record-setting deal last year to provide clean energy to Microsoft.
“We have gone through earnings announcements for the large US tech companies, and this is post the DeepSeek announcement, and all of them have reaffirmed their data centre strategy,” Jeh Vevaina, global chief investment officer of Brookfield’s renewable power and transition group, said. “That demand is not slowing down. In fact, it’s ramping up quite significantly.”
The transaction is expected to be completed in the first half of the financial year ending Mar 31, 2026, according to Monday’s (Feb 24) statement. It’s part of a £6.8 billion (S$11.5 billion) capital raise programme announced by National Grid last year to fund investments in the Britain’s power network.
National Grid shares rose 2 per cent in London.
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The deal also comes as developers wait for news about the durability of tax incentives enshrined in the Inflation Reduction Act (IRA) passed by former president Joe Biden.
So far, US President Donald Trump’s actions have mainly targeted offshore wind. The executive branch has less ability to unilaterally affect facilities that are mostly built on private land and supported by leaders in both major political parties.
While amendments to Biden’s landmark climate law may affect early-stage developments, Brookfield’s Vevaina does not expect it to have an impact on returns of the National Grid Renewables investment. Rather, it’s a moment in green investing that benefits players with scale and conviction.
“Renewables is not driven by government policy any longer,” he said. “It’s driven by corporate demand.”
The valuation for National Grid’s US renewables portfolio was at the low end of comparable transactions, likely reflecting overhang from Trump’s targeting of the IRA, said Patricio Alvarez, a utilities analyst for Bloomberg Intelligence.
The deal is the latest major investment by Brookfield in renewable power, following its £1.75 billion stake in UK offshore wind farms last year.
National Grid’s renewables division develops, constructs, owns and operates large solar parks, onshore wind farms and battery storage assets in the US. It has 1.8 gigawatts in operation and another 1.3 gigawatts under construction.
The British firm is keeping other parts of its business, including the power and natural gas networks it owns in New York and Massachusetts that serve more than 20 million people.
It also has a joint venture with Germany’s RWE to develop offshore wind in the US Northeast. BLOOMBERG
