Inside Blackstone’s Electrification Push: From Shermco to the Power Backbone of AI Data Centers

According to the National Electrical Manufacturers Association (NEMA), U.S. energy demand is projected to grow 50% by 2050. Electrical manufacturers have invested more than $10 billion since 2021 in new technologies to expand grid and manufacturing capacity, also reducing reliance on materials from China by 32% since 2018.

Power access, sustainable infrastructure, and land acquisition have become critical factors shaping where and how data center facilities are built. As we previously reported in Data Center Frontier, investors realized this years ago, viewing these facilities both as technology assets and a unique convergence of real estate, utility infrastructure, and mission-critical systems that can also generate revenue.

One of those investors is global asset manager Blackstone, which through its Energy Transition Partners private equity arm, recently acquired Shermco Industries for $1.6 billion. Announced August 21, the deal is part of Blackstone’s strategy to invest in companies that support the growing demand for electrification and a more reliable power grid. The goal is to strengthen data center infrastructure reliability and expand critical electrical services.

Founded in 1974, Texas-based Shermco is one of the largest electrical testing organizations accredited by the InterNational Electrical Testing Association (NETA). The company operates in a niche yet important space: providing lifecycle electrical services, including maintenance, testing, commissioning, repair, and design, in support of data centers, utilities, and industrial clients. It has more than 40 service centers in the U.S. and Canada.

In addition to helping Blackstone support its electrification and power grid reliability goals, the Shermco purchase is also part of Blackstone’s strategy to increase scale and resources—revenue increases without a substantial increase in resources—thus expanding its footprint and capabilities within the essential energy services sector. 

As data centers expand globally, become more energy intensive, and are pressured to incorporate renewables and modernize grids, Blackstone’s leaders plan to leverage Shermco’s national footprint and technical depth to help meet these needs, especially as new capacity is added to the grid and legacy infrastructure is modernized.

In addition, Shermco’s recurring, mission-critical service model offers resilient cash flows even during economic downturns, according to AInvest. Blackstone has both capital and operational experience to drive Shermco’s expansion while extracting value across infrastructure and energy transition portfolios.

Meanwhile, Shermco leaders anticipate this partnership to fuel its growth trajectory so it can grow its operational footprint and service offerings. It likely will benefit from strong growth driven by the expansion of data centers, renewable energy facilities, and industrial electrification.

Blackstone’s Data Center Portfolio

Blackstone is investing, acquiring companies, and forming joint ventures spanning real estate, infrastructure, and credit, to diversify and grow its data center portfolio. The Shermco acquisition adds to a long list of recent investments Blackstone has made as part of its portfolio diversification.

For example, in August, leaders announced an agreement to acquire data analytics energy intelligence platform Enverus, which provides comprehensive data analytics platform for capital allocation and asset optimization. Blackstone’s Senior Managing Directors Eli Nagler and Bilal Khan said Enverus’ advanced analytics and technology will help customers navigate the AI-driven electricity demand growth and the broader energy transition.  

Other recent investments include the following:

• Joint venture with PPL Corp., announced in July, to build, own, and operate new gas-fired, combined-cycle generation stations to power data centers in Pennsylvania.

• Investment of more than $25 billion in Pennsylvania’s digital and energy infrastructure, plus accelerate an additional $60 billion investment, also announced in July.

• Significant growth investment in July into IT services provider NetBrain to expand network automation and AI solutions to global enterprises, at a $750 million valuation. NetBrain is a top IT services provider in Japan.

• Acquisition of Potomac Energy Center in January, a power infrastructure in Virginia supporting data centers and AI.

• The 2024 acquisition of SEVES Group, parent company of Sediver Group, a provider of specialized electrical glass insulator solutions for the high-voltage transmission grid. Sediver has more than 600 million insulators in service worldwide and plays a key role in electrical grid modernization.

• Acquisition of Trystar in 2024, which designs and manufactures critical electrical power solutions for data center, industrial, commercial, healthcare, and utility markets.

• A 2024 investment into a $600 million senior secured credit facility with technology infrastructure company Aligned Data Centers, financing the development of Aligned’s newest and largest data center in Utah.

• Acquisition of Asia-Pacific data center giant AirTrunk in 2024, in a deal valued at $24 billion.

• Acquisition of Power Grid Components, Inc. in December 2023 for $600 million. PCG design and manufactures components for protection, monitoring, and safety applications in electrical substations, essential for the electrical grid. Products include high voltage disconnect switchgear, porcelain and glass insulators, and instrument transformers for revenue metering and protective relaying to electric utilities.

• Acquisition of QTS Realty Trust for $10 billion in August 2021, marking a major step into the data center market, with hopes to build QTS into the fastest-growing data center company in the world.

Other Investment Firms in the Game

As AI-driven cloud computing, grid modernization, and the electrification of manufacturing continues to escalate, firms are investing in data centers, power generation, and renewable energy transition to profit from the huge and growing energy market. Leaders at these firms see long-term infrastructure investment opportunities.

And Blackstone isn’t the only investment firm carving out a piece of the data center and energy markets. Companies like Apollo Global Management, DigitalBridge Group, KKR & Co. Inc., CBRE Group, Cushman & Wakefield, Jones Lang LaSalle Inc. (JJL), Newmark, and others are investing in and acquiring organizations that support the data center and energy demand growth, including:

• Data centers.

• Data center builders and operators.

• IT service providers.

• Power companies.

• Power generation stations.

• Power product suppliers.

• Renewable energy and datacenter financing and banking firms.

• Electrification, power and digital infrastructures providers.

Because data centers are the backbone of the digital revolution and a primary driver of increased power needs, investment firms will continue to look for opportunities to support the sector.

Blackstone’s Next Phase: Integrating Power, Data, and Service

In the weeks following the Shermco acquisition, Blackstone has continued to broaden its reach across every layer of the data center and AI infrastructure stack. The firm’s moves since mid-September reveal a clear pattern of vertical integration; linking power generation, electrical service, data center operations, and AI-enabling technology under one strategic umbrella.

Building the Energy Backbone for AI

The most visible signal came in Blackstone Energy Transition Partners’ purchase of the 620-MW Hill Top Energy Center in western Pennsylvania for roughly $1 billion.

The high-efficiency combined-cycle natural gas plant is one of the newest in the region and sits near several hyperscale data center development corridors. Blackstone’s leadership positioned the deal as a direct response to AI-driven power demand, emphasizing the need for reliable generation close to load centers.

Combined with Shermco’s deep bench of testing, commissioning, and maintenance talent, the Hill Top acquisition equips Blackstone with an integrated toolkit, from generation to ongoing reliability services, to address the persistent grid-capacity bottleneck facing large-scale compute projects.

Expanding the Data Center Footprint

At the same time, QTS Realty Trust, the platform Blackstone acquired in 2021, has accelerated its expansion plans. The company recently secured $1.65 billion in private debt financing to fund its next wave of U.S. campuses, including a proposed $10 billion mega-development in Cedar Rapids, Iowa.

QTS’s growth underscores Blackstone’s ambition to pair new, power-ready sites with modern sustainability and interconnection frameworks: a strategy increasingly informed by the electrical reliability capabilities Shermco brings to the table.

Financing the Broader Ecosystem

Beyond its owned assets, Blackstone continues to act as a financier of the broader data infrastructure ecosystem. The firm expanded Aligned Data Centers’ senior secured credit facility to over $1 billion, providing growth capital for new AI-ready facilities.

This complements its earlier $600 million credit investment in Aligned’s Utah campus and mirrors Blackstone’s approach to using credit platforms as scalable instruments for accelerating capacity across multiple operators.

Investing Up the Stack

Blackstone is also positioning for value further up the AI infrastructure stack. In early 2025, it invested $300 million in DataDirect Networks (DDN), a global leader in AI and HPC data storage, at a $5 billion valuation.

The investment reflects an emerging thesis inside the firm: that owning pieces of both the physical compute infrastructure and the data-handling layer offers compounding advantages as enterprise AI adoption deepens.

Toward an Integrated Infrastructure Model

When viewed together, these moves outline a next-phase strategy that extends well beyond traditional private equity ownership. Blackstone’s infrastructure portfolio now spans:

• Power generation (Hill Top Energy Center; JV with PPL Corp.)

• Electrical services (Shermco Industries, Trystar, Power Grid Components, SEVES/Sediver)

• Data center development and operations (QTS Realty Trust, AirTrunk, Aligned financing)

• Digital infrastructure software and AI platforms (DDN, Enverus, NetBrain)

This vertically aligned structure gives Blackstone unusual leverage across construction, commissioning, and operation: the very choke points defining the pace of AI infrastructure deployment in North America.

Implications for the Market

The cumulative effect is a self-reinforcing ecosystem capable of delivering reliable, high-density data center capacity at scale, and doing so with fewer dependencies on external utilities or service vendors. As power scarcity and permitting delays become existential challenges for hyperscalers, Blackstone’s control over generation, electrical expertise, and capital allocation positions it as one of the few investors able to deliver fully integrated solutions.

For competitors such as KKR, DigitalBridge, Apollo, and Brookfield, the model raises the bar: the next wave of infrastructure leadership may hinge less on who owns the most real estate, and more on who controls the full chain of energy and reliability that powers AI compute.

At Data Center Frontier, we talk the industry talk and walk the industry walk. In that spirit, DCF Staff members may occasionally use AI tools to assist with content. Elements of this article were created with help from OpenAI's GPT5.

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