How AI companies buy power

AI companies buy power four ways: bundled into colocation rent, as utility service through an interconnection queue, under long-term power purchase agreements with independent power producers, or by building generation themselves. The larger the load and the tighter the timeline, the further down that list a buyer moves — which is why the biggest AI builders are increasingly contracting for dedicated generation directly.

Colocation: power in the rent

The simplest path. A colocation provider owns the building and the utility relationship, and the tenant pays for capacity — power arrives bundled into the lease. It works well at moderate scale, but the tenant inherits whatever power the landlord could procure, on the landlord's timeline, at the landlord's margin. For AI-scale loads, the inherited answer is increasingly not enough — the capacity a landlord can offer is capped by the same grid constraints every other buyer faces.

Utility service: standing in line

Buy the land, build the shell, and ask the utility for service. For large loads this means an interconnection request and the studies and upgrades that follow — a process measured in years, with the schedule owned by the queue rather than by the buyer. Utility service remains the default for loads the grid can absorb; the problem is that AI-scale requests increasingly are not. The ERCOT queue, explained covers the mechanics of why.

The PPA with an IPP

A power purchase agreement puts a dedicated generator under long-term contract — increasingly built behind the meter, on the same site as the load, so the queue never enters the picture. The buyer gets firm power on a construction timeline without owning a plant; the seller gets a contract sturdy enough to finance the build. This is the structure the market is converging on for the largest loads, because it is the only one that puts time-to-power and firmness under the buyer's contract rather than at the queue's discretion. How to evaluate a BTM power provider covers the diligence, and the cost math compares the economics with grid service.

Self-build, and the shift to direct procurement

The largest buyers sometimes build and own generation outright — maximum control, maximum capital, and a power company to staff. Owning the plant means owning fuel procurement, operations, maintenance, and every reliability outcome, which is why most buyers stop short of it even when they could afford it. But the direction of travel across every tier is unmistakable: power procurement has moved from a facilities detail to an executive decision, and the buyers winning the buildout are the ones treating electrons as a supply chain to secure rather than a service to subscribe to. The supply side of that trade is described in what is a power foundry?.

About Corley Energy

Corley Energy is a behind-the-meter independent power producer, founded in 2024 by Jake Corley, Tim Bozeman, and Mark Meyer. We convert stranded Permian Basin natural gas into firm, contracted electricity for AI data centers at Power Foundry, our ~1,000-acre development in Upton County, Texas. Start with what a power foundry is, see the company facts, or check current capacity on the Sites page.

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