Blackstone nears deal to buy former Britishvolt site in northern England

Blackstone is close to acquiring the former Britishvolt industrial site in the north of England, with plans to build one of Europe’s largest data centres as the artificial intelligence boom drives demand for computing power. 

Northumberland County Council is in talks with the US private equity firm about the 95-hectare coastal property near Blyth that could ultimately see Blackstone invest as much as £10bn in the area, according to council papers released on Monday.

Council leader Glen Sanderson said the project offered “a huge boost to the regeneration and renaissance of the local area”.

Britishvolt’s plan to build a “gigafactory” for electric vehicle batteries on the site of a former power station had been symbolic of the UK’s efforts to compete in high-tech automotive manufacturing, before the company collapsed last year. 

The land is in the hands of Britishvolt’s receivers, but the local government has the right to buy back the land under certain conditions. 

The council will next week meet to consider handing the US private equity firm long-term control of the site in exchange for up to £110mn in funding for local development. Blackstone would also pay £20mn to acquire the land.

If successful, it is hoped that the project could attract billions in investment to build one of Europe’s largest data centres and create about 4,000 jobs, the council said. 

The deal would mark an end to the effort to find another company to back an EV battery factory on the site, or an alternative plan to make it a major manufacturing centre.

Jaguar Land Rover owner Tata Motors previously expressed interest in the site, the FT reported last year, as well as other carmakers and wind turbine makers.

The bid for the site from Blackstone underscores the intense interest among property investors and tech companies to invest in data centres. The rise of artificial intelligence is expected to vastly increase the need for these facilities. 

Blackstone acquired US data centre group QTS for $10bn in 2021, which would manage the project. Rival Brookfield has also invested heavily in these high-tech facilities.

“Blackstone and QTS have the capital, expertise and record required to deliver on growing demand for data centre infrastructure,” the firm said.

However, there is no guarantee that the data centre project will go ahead, even if Blackstone secures the land. The US investor’s plans are contingent on securing planning permission, electricity supply and sufficient internet connectivity at the site — and gauging customer demand.

The Blyth site benefits from access to renewable power and the infrastructure necessary to bring enough electricity to run a data centre of that size. Difficulty in securing electricity is one of the major stumbling blocks for data centre investments. 

“The data centre construction boom continues globally, with supply struggling to keep up with record demand,” Green Street analyst David Guarino wrote in a note on Monday. “As in most of the world, in Europe, power is the critical limitation on expansion.” 

Blackstone would probably look to lure the likes of Microsoft, Google, Amazon or Meta as a tenant for the site. A future tenant would need to invest billions of its own into the computer hardware inside the centre. The council said this investment could be an additional £5bn-£10bn.