What is an independent power producer?

An independent power producer, or IPP, is a company that develops, owns, and operates power generation and sells the electricity — typically under long-term contract — without being a regulated utility. A utility must serve everyone in its territory and earns a return set by regulators; an IPP chooses its projects and its customers and lives on the contracts it signs. Much of the competitive generation built in the United States in recent decades came from IPPs.

IPP vs utility

A utility owns wires, serves a territory, and recovers costs through tariffs set in rate cases. An IPP owns generation and recovers costs through negotiated contracts. The distinction matters to a buyer because it determines what can be negotiated: with a utility you take the tariff and the interconnection process that comes with it; with an IPP the price, term, availability guarantee, and delivery point are all terms in a contract. Neither model is better in the abstract; they were built for different jobs. The utility was built to electrify everyone. The IPP was built to serve a chosen load well.

IPP vs equipment rental

Renting generators looks similar — power without the utility — but the structures diverge. A lessor rents machines and plans on their next deployment; an IPP commits capital to a specific site and load for the contract’s term and operates what it owns. The rental model prices in mobility. The IPP model prices in permanence, which is what a facility built to run for decades actually needs.

Why AI loads contract with IPPs

AI data centers need blocks of firm power — 100 megawatts and up — on schedules utility service cannot meet, because utility service runs through the interconnection queue (see the ERCOT queue, explained). An IPP can build dedicated generation on the load’s timeline and wrap it in a power purchase agreement with negotiated availability guarantees — the shape of commitment a facility with a multi-decade life actually requires from its power supplier. The buyer’s credit supports the financing, the IPP’s plant supports the load, and the contract holds the two together.

The behind-the-meter IPP

A newer subcategory puts the IPP’s plant on the same site as the customer, on the customer’s side of the meter, so the power never touches the grid at all. It combines the IPP’s contract structure with full independence from the queue — the model described in what is a power foundry and practiced by Corley Energy in the Permian Basin, where the fuel is cheapest (why Waha gas is so cheap). How the economics compare with grid service is in behind-the-meter vs grid: the cost math.

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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