Charging Forward: Senate Bill 6, Midwest Incentives, and the Private Equity Engine Behind AI’s Infrastructure
- Rich Washburn
- Jun 30
- 4 min read
As data centers cement their place at the heart of the AI and cloud revolutions, Texas and the broader United States are navigating the twin challenges of unprecedented compute demand and the energy infrastructure needed to sustain it. Senate Bill 6, recently signed into law by Gov. Greg Abbott, marks a watershed moment for Texas, integrating large power consumers—particularly hyperscale data centers—into grid reliability frameworks. Meanwhile, the Midwest is emerging as a new frontier for data center development, and private equity is deploying billions of dollars to build the semiconductor and energy backbone that will define America’s digital future.
Senate Bill 6: Turning Data Centers into Grid Partners
Effective January 1, 2026, any Texas facility drawing 75 MW or more must install utility-controlled shutoff mechanisms, enabling ERCOT to curtail or disconnect these non-critical loads during grid emergencies. This mandatory curtailment ensures that, during extreme events—be it a scorching summer peak or unexpected thermal‐plant maintenance—large consumers can be throttled back to preserve overall system integrity.
Complementing this, a voluntary demand response program invites eligible operators to bid flexible load reductions or on-site generation switches into a competitive market, with at least 24 hours’ advance notice. By marrying firm reliability obligations with market-based incentives, S.B. 6 transforms hyperscale data centers from inflexible power hogs into “virtual generation” assets capable of bolstering grid resilience rather than straining it.
The Midwest Boom: Indiana, the Great Lakes, and Beyond
While Texas leads in deployed data center capacity, the Midwest is rapidly closing the gap. States from Kansas to Wisconsin are rolling out expanses of greenfield sites, attracted by lower land costs, cooler ambient temperatures, and proximity to abundant freshwater from the Great Lakes.
Energy & Water Dynamics: Data centers already consume 4.4 percent of U.S. electricity and could soar to 12 percent by 2028. In Northern Indiana alone, forthcoming facilities are projected to outstrip residential consumption by 2030. Yet water usage—between 1 million and 5 million gallons per day for evaporative cooling in a hyperscale campus—remains cloaked by municipal utility reporting, obscuring the true environmental footprint.
Incentives & Impact: Midwest state tax credits and incentives have lured Amazon to New Carlisle, Indiana, and drawn Microsoft, Google, and Meta to explore multi-site campuses. However, Citizens Action Coalition cautions that utilities and local governments often sign nondisclosure agreements, limiting public visibility into these facilities’ energy and water demands.
Regulatory Response: The Great Lakes Compact requires cities to report aggregate water withdrawals but not end-use breakdowns. As data center buildouts mount, states may need greater transparency and targeted policies—much like Texas’s S.B. 6—to ensure balanced resource stewardship.
Private Equity: The Capital Catalyst for AI Infrastructure
Behind the scenes of every new data center are private equity investors who supply the capital, expertise, and strategic partnerships to scale compute, power, and cooling assets nationwide. Since 2020, private equity has poured over $1 trillion into IT infrastructure, with a significant share directed at semiconductors, data centers, and energy projects that together form the backbone of AI’s expansion.
Semiconductor Strengthening
A consortium led by Apollo Global Management committed $750 million to Wolfspeed’s silicon carbide plant—bolstering domestic chip production for electric vehicles, 5G, and edge AI devices. This investment underscores private equity’s pivotal role in securing the supply chain for tomorrow’s high-performance computing.
Data Center Financing
CyrusOne, a leading data center REIT, partnered on an $8 billion financing package to expand facilities across Illinois, Texas, and Ohio.
KKR and Energy Capital Partners launched a $50 billion strategic initiative targeting both data center construction and adjacent power generation, ensuring that hyperscale campuses have reliable onsite energy options.
Energy Infrastructure Partnerships
Blackstone’s acquisition of Potomac Energy Center—a natural gas–fired plant in Virginia—demonstrates how private capital is uniting generation assets with major compute hubs to guarantee uninterrupted power supplies.
On Day One of his 2025 term, President Trump spotlighted a massive private commitment—“Stargate”—to invest up to $500 billion in AI infrastructure, a joint venture among OpenAI, SoftBank, and Oracle projected to create 100,000 jobs and fund sprawling new campuses.
By aligning capital deployment with regulatory frameworks like S.B. 6, private equity not only underwrites buildout costs but also drives innovation in energy efficiency, predictive maintenance, and automated load-management systems that enable data centers to be good grid citizens.
The Eliakim Edge: Guiding Clients Through Complexity
At Eliakim Capital, we stand at the nexus of technology, energy markets, and capital strategy. Our multidisciplinary teams offer:
Regulatory Advisory: Navigating interconnection protocols, curtailment requirements, and water-usage reporting rules from Texas to the Great Lakes.
Energy Markets Strategy: Structuring demand‐response bids and power-purchase agreements that optimize returns for hyperscale operators and private equity sponsors alike.
Capital Markets & M&A: Crafting narratives around grid resilience and sustainability to enhance valuations in private placements, debt financings, and IPOs.
Sustainability & ESG: Designing transparent water-management disclosures and renewable-integration roadmaps that satisfy community stakeholders and regulatory bodies.
Charting a Collaborative Future
The convergence of legislative innovation (like Texas’s S.B. 6), geographic diversification (with a Midwest boom in Indiana and beyond), and private equity’s formidable capital is reshaping the next chapter of America’s digital infrastructure. As hyperscale data centers proliferate, their alignment with grid reliability and environmental stewardship will determine both investor returns and the resilience of our energy systems.
Eliakim Capital is uniquely positioned to guide data center developers, energy utilities, and financial sponsors through this complex landscape—transforming regulatory requirements and resource constraints into strategic advantages that power the AI era.
Connect with Our TeamTo explore how your organization can leverage market frameworks, secure high-capacity power, and harness private capital for sustainable data center growth, reach out to us at tc@eliakimcapital.com. Your strategic partner in navigating the intersection of technology, energy, and capital.
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