Equinor to Pay $940M for Stake in Jessup Natural Gas Plant as Data Center Demand Rises
Norwegian energy company Equinor ASA has agreed to pay $940 million for a significant stake in the Lackawanna Energy Center in Jessup, Pennsylvania, in a deal that underscores how surging electricity demand from data centers is reshaping power-market strategy.
The purchase covers 87.71% of the plant’s Class A shares, which carry preferential dividend rights. Equinor said Aug. 17 that it is buying the stake from funds managed by Global Infrastructure Partners, a BlackRock subsidiary. BlackRock, one of the world’s largest asset managers, has more than $15 trillion in assets under management. Invenergy, the Chicago-based developer of the 1,485-megawatt natural gas plant on Sunnyside Road, will continue to manage and operate the facility.
Equinor, headquartered in Stavanger, Norway, has operations in more than 20 countries and is a major energy supplier in Europe, with oil, gas and renewable assets. The company said the plant gives it a stronger foothold in PJM Interconnection, the nation’s largest grid operator, which serves about 67 million people across Pennsylvania, a dozen other states and Washington, D.C.
The purchase price is subject to regulatory approvals and could be reduced at closing, Equinor said.
Northeastern Pennsylvania has become a hub for largely speculative data center development. In Jessup and Archbald alone, 58 data centers have been proposed across eight projects, including one on land adjacent to the Lackawanna Energy Center. At least two more data centers are planned in the Archbald portion of Valley View Business Park.
That pipeline has accelerated the push for new power generation, especially as data centers outpace new power plants. A joint venture involving PPL Corp. spent $40.4 million this year on land in Luzerne County for possible power plants. Companies tied to a Lackawanna County data center developer have proposed three natural gas plants on Bell Mountain in Dickson City and another on Eynon Jermyn Road in Archbald, totaling a gigawatt of capacity.
The Lackawanna Energy Center, which began commercial operation in January 2019, was built after a long and contentious approval process in Jessup. At the time, a fund managed by BlackRock Real Assets’ Global Energy & Power Infrastructure team was a major investor in the project.
The pressure on the grid is already visible. PJM received emergency orders from the U.S. Department of Energy multiple times this summer to allow data centers to run backup generators to support the grid and avoid blackouts during extreme heat. PJM forecasts data centers will account for 30 of the 32 gigawatts of electricity demand growth from 2024 to 2030.
“Electricity demand in PJM is growing rapidly, driven by electrification, data centres and industrial activity,” said Helge Haugane, Equinor’s executive vice president for power. “This acquisition gives Equinor further access to the largest power market in the US and is located close to our significant Appalachian gas position. It also provides early cash flow and long-term value potential. We look forward to working with Invenergy as an experienced operator and exploring further collaboration.”
Equinor described the Lackawanna facility as one of the largest and most efficient gas-fired plants in the PJM market. The remaining Class A shares and 100% of the Class B shares will remain with Invenergy AMPCI Thermal Power.