The capital, power, and execution risk involved in building the next generation of data centers is straining the capacity of even the largest developers, hyperscalers, and capital providers. Global data center investments are projected to run in the billions over the balance of the decade and individual campuses are targeting power requirements reaching the peak demand of major metropolitan areas.1
As a result, joint ventures (JVs) have shifted from one financing option among many to the default delivery model. Raising the equity, securing the megawatts, and underwriting the offtake at the scale now required is rarely within the reach of any single party. This is increasingly so as developers compete for capacity on grids already strained by the electrification of transport and industry and by a broader global realignment around energy security.
Three JV archetypes are emerging as the dominant structures: developer with capital partner, developer with power developer, and developer with hyperscaler. Each comes with its own commercial logic, risk allocation, and pinch-points.
Developer–capital partner JV
The most established of the three archetypes (and in dollar terms the largest) are partnerships between data center developers and a capital provider, typically an infrastructure fund, pension plan, or sovereign wealth investor. Institutional appetite for opportunities in the sector is unprecedented, with almost all investors in a recent CBRE survey planning to increase their data center allocations and a rising share intending to deploy USD500 million or more.2
That appetite is increasingly opportunistic: investors want development-stage exposure for its returns, but generally lack the platform to deliver it themselves.3 The resulting ventures therefore tend to take one of three forms.
Programmatic development JVs
These pair a developer with a financial partner in a long-term vehicle that funds a defined pipeline of future developments against agreed investment criteria (e.g., target markets, minimum power capacity, and pre-leasing thresholds), often with a governance framework for approving each new project.
The developer monetizes part of its land bank and de-risks its forward capital commitments while retaining operational control and earning fees and performance-based profits. This approach supersedes one-off, single-asset JVs by giving the developer stable, repeatable capital and the investor a scalable portfolio.
The Blackstone-Digital Realty partnership is the market template; Blackstone holds 80% and Digital Realty 20%, while the latter manages development and operations for customary fees. This USD7 billion venture will eventually deliver approximately 500MW of data center capacity in Frankfurt, Paris, and Northern Virginia.4
Platform-level minority or majority investments
These give a financial sponsor scaled exposure at the enterprise or operating-company level: the sponsor takes a stake in the operating platform itself, acquiring an interest in the developer’s whole business and pipeline rather than funding named sites against milestones. Recent examples include the BlackRock–MGX-led acquisition of Aligned Data Centers, which, at roughly USD40bn, was the largest data center transaction announced at the time of writing.5
Cross-border construction-and-capital pairings
These may be either programmatic or platform-level. In November 2025, ACS Group and BlackRock’s Global Infrastructure Partners (GIP) launched a 50:50 venture combining Spanish engineering, procurement and construction (EPC) capability with infrastructure equity. This partnership is seeded with ACS’s existing 1.7GW portfolio of data center assets under development across Europe, the United States, and Australia, valued at approximately EUR2bn, while ACS is reviewing a further pipeline exceeding 11GW.
Negotiating these partnerships raises familiar issues in heightened form. Because long lead times for power and equipment force significant decisions long before tenancy is committed, the parties negotiate governance rights over capex calls, default funding, pre-emption, and exit against a project scope that is still moving.
Valuation remains the recurring challenge; tag-along, drag-along, and pre-emption mechanics must be priced to power capacity rather than standard real-estate or book-value multiples, since a powered shell site can command a 2–3x premium over a comparable site without secured power.
Funding structure compounds the problem. Where the capital partner funds development in tranches against milestones, such as planning consent, a grid offer, and an anchor lease, the parties must agree up front what happens if a milestone slips; where they layer in fund-level leverage or back-leverage, the documents must anticipate enforcement scenarios that could otherwise compromise the operating company.
Developer–power developer JV
Power has become the binding constraint on data-center build-out. Grid-connection queues can be as long as seven to ten years in parts of Europe, U.S. interconnection upgrades and load ramps run persistently behind schedule, and delivery backlogs for much of the global supply of heavy-frame gas turbines now run beyond 2029.6 7 As a result, securing power is now as commercially decisive for developers as securing land.
The response has been a wave of collaborations that pair data center developers and operators with power counterparties, from independent power producers (IPPs) to equipment manufacturers, midstream operators, and behind-the-meter (BTM) specialists.
These arrangements range from strategic contractual collaborations to full equity investments. Developers facing multi-year grid queues must decide which structure to pursue and do it early, as these structural choices dictate contract architecture, financing, and the downstream allocation of risk.
Under the build-and-operate equity model, the data center developer takes equity in the generation project vehicle alongside an IPP or equipment-led sponsor.
The joint venture procures the turbines, typically using the data center developer’s queue position or balance sheet to secure manufacturer slots, develops the site and finances the plant on a project-financed basis, with lender recourse limited to the generation special purpose vehicle (SPV). The data center is financed in parallel, with the two financings either “stapled” together through inter-project agreements covering shared site rights, fuel supply, common facilities, step-in and cross-default, or combined in a single financing of both the plant and the data center.
In the contractual offtake model, rather than take equity, the data center developer enters into a long-term power purchase agreement (PPA) or tolling arrangement with a power developer or IPP that owns the turbines and the plant outright.
The generator carries the manufacturer purchase risk, the construction and commissioning risk, the financing risk, and, subject to contractual pass-throughs, the operating risk, although these are unlikely to be fully back-to-back with the data center’s service level agreements (SLAs), leaving residual risk in the data center project.
The PPA or tolling charge must recover the generator’s capital cost over a tenor short enough to match the bridging use case (often seven to 12 years), mirroring the expected grid-connection date, while still delivering an all-in dollar-to-megawatt-hour return that the tenant will accept as competitive against grid-delivered power, alternative BTM offerings, and the cost of delay.
VoltaGrid’s collaboration with Oracle is a leading example: VoltaGrid will deploy more than 2,300MW of modular on-site generation to supply Oracle Cloud Infrastructure’s AI data centers, owning and operating the platform while Oracle takes the power.8
Each model carries a distinct risk, return, and bankability profile. Build-and-operate gives the developer dispatch control, merchant and grid-export upside once interconnection arrives, and an equity return on the power asset.
However, it also consumes balance sheet and operational capacity and must satisfy demanding lender requirements, including completion support, fixed-price construction, equipment wraps, and a creditworthy long-term tenant offtake. The offtake model by contrast trades ownership, dispatch control, and long-term upside for balance-sheet relief and speed.
Equipment scarcity shapes the negotiation either way. In a build-and-operate structure, the parties bargain directly over turbine allocations, weighing exclusivity, reservation rights, transfer rights, and long-stop dates against shared exposure to manufacturer force majeure; in an offtake arrangement, the same scarcity is addressed through milestone-based delivery protections and walk-away triggers tied to the generator's procurement timeline.
Fuel supply, interconnection, and curtailment risk are negotiated directly where the parties share commodity exposure (as in an equity venture or tolling structure) and otherwise sit with the generator under a standard PPA, reaching the developer only through price and pass-through mechanics. “Stranded asset” protection for the generator, through step-in rights, grid-export rights, or termination buyouts, has become a routine ask across both models.
In practice, the choice is rarely made in the abstract. It revolves around the tenant’s procurement preferences; the availability and cost of project debt for refurbished or non-standard equipment (where lender appetite remains uneven); the developer’s appetite to hold power assets long-term rather than monetize them after the commercial operation date (COD); and the regulatory treatment of BTM generation in the relevant jurisdiction, including grid-export permissions, capacity-market eligibility, and emissions compliance.
Many sponsors pursue both models across their portfolios, reserving the equity joint venture for flagship campuses where control and upside justify the capital and favoring offtake structures elsewhere to preserve speed and protect their balance sheets.
As with the capital-partner partnerships, the commercial model is ultimately selected with the end tenant’s requirements in mind: the answer is almost always dictated by what the hyperscaler or AI tenant at the top of the contractual stack is willing to underwrite.
Developer–hyperscaler JV
In the third model, the hyperscaler takes a direct equity stake in the infrastructure rather than relying solely on a lease or PPA offtake. This approach offers both speed and control: with interconnection queues measured in years, owning or co-owning the development pipeline, the powered land, and, increasingly, the generation has become a way to realize “speed to power” and to secure scarce equipment and build-ready sites ahead of competitors.
Here, two related drivers are at work. The first is vertical integration into the energy supply chain; rather than contracting at arm’s length, hyperscalers are acquiring developers and powered land to internalize the pipeline. The second is a continued reluctance to carry data center real estate on balance sheet, which pushes hyperscalers toward minority-equity and lease-back structures that preserve off-balance-sheet treatment while still securing capacity.
The dominant documented structure pairs the hyperscaler with a capital partner that takes the majority economic interest, with the hyperscaler providing construction and property-management services and leasing back the completed campus.
Meta’s approximately USD27bn Hyperion joint venture with funds managed by Blue Owl Capital is a good case in point: Meta provides construction and property management and leases the campus back under a long-term operating lease supported by a residual value guarantee. The arrangement keeps the asset off Meta’s balance sheet, with the project financed largely in the private-credit market.9
An alternative model dispenses with the third-party developer altogether: the hyperscaler acquires the developer or takes a controlling equity stake, absorbing its team, its build-ready plans, and above all its powered land and generation pipeline. Alphabet’s USD4.75bn acquisition of the data center and energy-infrastructure business of developer Intersect, completed in March 2026, follows this pattern; building on Google’s earlier co-location partnership with the same developer it enables Google to dictate jurisdiction and timing, align modular data center construction with the power build-out, and amass powered land directly.10
A third emerging variant is a true co-development joint venture in which the developer and the hyperscaler share development costs and hold joint approval rights over land acquisition, power procurement, and campus design.
Here, the hyperscaler commits equity alongside the developer rather than arriving as a tenant after development and secures a pre-negotiated lease on agreed terms for each site it elects to take.
The structure gives the hyperscaler early influence over jurisdiction, power strategy and specification, while the developer retains its independent platform and contributes execution capability and local market relationships. The pre-agreed lease provides the hyperscaler with a call on capacity as demand materializes and gives the developer construction-start certainty once a site is elected.
Whichever model is used, the documentation must reconcile the hyperscaler’s tenant-style requirements (e.g., uptime guarantees, technology refresh, security, and ESG reporting) with its sponsor-style rights (e.g., governance, capex approvals, transfer restrictions, and exclusivity).
Tax structuring, particularly in relation to credits available under U.S. energy policy, together with the hyperscaler’s own carbon-accounting framework, frequently drives the choice of contracting entity and the location of the equity interests.
Looking ahead
These three models are not mutually exclusive. Many larger transactions combine elements of each: a capital partner provides equity financing, a power developer delivers the energy, and a hyperscaler underwrites the offtake.
Blackstone’s USD25bn Pennsylvania program is a good example: Blackstone-backed QTS Data Centers is developing the data center campuses while Blackstone Infrastructure co-owns the gas-fired generation that will serve them through a joint venture with PPL Corporation, with one sponsor effectively assembling the capital, power, and real estate in a single region.11
Sophisticated market participants increasingly deploy several models across a single portfolio, matching structure to the constraints of each site. What is consistent across them is that the data center is no longer financed as a real estate asset with a power supply line, but is instead delivered as an integrated energy and infrastructure project with the corresponding legal complexity.
For developers, the strategic question is no longer whether to take a partner, but which combination of partners best matches the constraints of a particular site, jurisdiction, and customer. For investors, lenders and hyperscalers, the discipline of allocating risk across multiple counterparties will define which projects make it from announcement to operation.
Footnotes
1. Int'l Energy Agency, Energy and AI (April 2025), https://www.iea.org/reports/energy-and-ai.
2. CBRE, 2025 Global Data Center Investor Intentions Survey (August 6, 2025), https://www.cbre.com/insights/reports/2025-global-data-center-investor-intentions-survey (95% of surveyed investors plan to increase data center investment; 41% plan to allocate USD500 million or more, up from 30% in 2024).
3. CBRE, 2025 Global Data Center Investor Intentions Survey (August 6, 2025), https://www.cbre.com/insights/reports/2025-global-data-center-investor-intentions-survey (62% of respondents favor opportunistic, new-development strategies).
4. Digital Realty and Blackstone, Digital Realty and Blackstone Announce $7 Billion Hyperscale Data Center Development Joint Venture (December 7, 2023), https://www.blackstone.com/news/press/digital-realty-and-blackstone-announce-7-billion-hyperscale-data-center-development-joint-venture/.
5. Aligned Data Centers, AI Infrastructure Partnership (AIP), MGX, and BlackRock’s Global Infrastructure Partners (GIP) to Acquire All Equity in Aligned Data Centers (October 15, 2025), https://aligneddc.com/press-release/ai-infrastructure-partnership-aip-mgx-and-blackrocks-global-infrastructure-partners-gip-to-acquire-all-equity-in-aligned-data-centers/.
6. A&O Shearman, Powering Data Centers: The Rise and Challenges of 'Behind the Meter' Frameworks (May 13, 2026).
7. Zachary Skidmore, ProEnergy Repurposes Jet Engines to Power Data Centers Amid Gas Turbine Shortages, Data Center Dynamics (October 22, 2025), https://www.datacenterdynamics.com/en/news/proenergy-offers-repurposed-jet-engines-to-data-cent/
8. VoltaGrid LLC, VoltaGrid Collaborates with Oracle to Power Next-Gen AI Data Centers (October 15, 2025), https://www.globenewswire.com/news-release/2025/10/15/3167053/0/en/voltagrid-collaborates-with-oracle-to-power-next-gen-ai-data-centers.html.
9. Meta Platforms, Inc., Meta Announces Joint Venture with Funds Managed by Blue Owl Capital to Develop Hyperion Data Center (October 21, 2025), https://investor.atmeta.com/investor-news/.
10. Alphabet Inc., Alphabet Announces Agreement to Acquire Intersect to Advance U.S. Energy Innovation (December 22, 2025), https://abc.xyz/investor/news/news-details/2025/Alphabet-Announces-Agreement-to-Acquire-Intersect-to-Advance-U-S--Energy-Innovation-2025-DVIuVDM9wW/default.aspx.
11. Blackstone to Invest More Than $25 Billion in Pennsylvania's Digital and Energy Infrastructure, Plus Catalyze an Additional $60 Billion Investment, Blackstone (July 15, 2025), https://www.blackstone.com/news/press/blackstone-to-invest-more-than-25-billion-in-pennsylvanias-digital-and-energy-infrastructure-plus-catalyze-an-additional-60-billion-investment/.
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