Avi Salzman

An unlikely cast of characters has jumped to the lead in the race to power artificial-intelligence data centers. Pipeline company Williams won approval this month to build a natural-gas power plant near Columbus, Ohio, that will plug directly into a Meta Platforms data center. The project will be disconnected from the broader power grid in a setup known as "behind the meter," because the power is coming from the customer's side of the electric meter.

That's a rarity. In almost all of America, electricity consumers get their power "in front of the meter" -- from large electricity grids operated by utilities. But AI and its enormous power needs are changing the game. Big tech companies don't want to wait for utilities to hook them into the grid, because speed matters in AI. The Ohio power plant is expected to be switched on by the third quarter of next year, a quick start-up date in an age when grid backlogs have forced some power projects to wait more than five years to get connected.

Look for more of these announcements in the months ahead.

"I would expect that we will see more of these deals in the second half of 2025 and beyond," said Rob Thummel, a portfolio manager at Tortoise Capital.

The deal is notable for another reason, too. It shows that the AI gold rush is likely to benefit a much broader set of companies than originally expected. It's not just companies such as Nvidia and Microsoft. In Meta's case, the players involved are not known for being at the center of the electricity or AI industry. They include Williams, which is best known for building natural-gas pipelines, and Caterpillar, which is known for making massive construction equipment.

Williams, however, has expertise in using equipment that's also useful in data centers, such as compressors and turbines. So it's well-placed to profit here, too. Other pipeline companies such as Energy Transfer and Kinder Morgan are benefiting from data-center growth, too, generally by providing gas to the plants. But it appears to be unprecedented for a pipeline company to be building a power plant like this one, Thummel said.

As for Caterpillar, it's also in a good position to benefit from this trend, despite not being well-known for natural-gas turbines. It has an opening because the biggest players in the natural-gas turbine industry -- GE Vernova, Siemens Energy, and Mitsubishi Heavy Industries -- are struggling to keep up with all the demand for new natural-gas power plants, given increasing demand from data centers and other electricity users. Within four years, new data centers are cumulatively expected to consume more than 10 times as much power as a big city such as Philadelphia.

For tech companies that want turbines now, Caterpillar -- which tends to sell smaller turbines than the big players -- is one option. Bank of America analyst Michael Fenigar wrote this month that power generation is now the fastest-growing business at Caterpillar, and one of the "least understood." Data-center power is a big part of that. Fenigar rates Caterpillar stock at Buy with a $385 price target.

Meta's Ohio project will sit on a 740-acre campus in a city called New Albany. The data center is already under construction, according to state regulatory documents. The power plant next to it will provide 200 megawatts of capacity, or enough for around 100,000 households if it was connected to the larger grid. There will be three Siemens turbines on site, 12 turbines developed by a Caterpillar subsidiary, and 15 Caterpillar reciprocating engines, according to the regulatory documents.

Williams and Caterpillar aren't the only unexpected companies that could profit by jumping into the AI power game. Other players are likely to benefit from these trends, too. Chevron and Exxon Mobil, for instance, are both working on natural-gas power plant ventures for data centers that could diversify their businesses away from oil.

The gold rush is just beginning. New potential winners are emerging.

Write to Avi Salzman at avi.salzman@barrons.com

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June 26, 2025 13:26 ET (17:26 GMT)

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