French private equity investment firm Ardian is set to acquire Energia Group, one of Ireland’s largest electrical utilities, from I Squared Capital.

First reported by the Financial Times, the acquisition is a bet that the power supplier will play a crucial role in supplying the country’s AI data center sector.

The deal is reportedly valued at around €2.5 billion ($2.91bn) and will see Ardian take control of Energia’s extensive generation portfolio. Energia currently supplies around 17 percent of Ireland’s total electricity, and 20 percent of its wind generation capacity. The deal represents Ardian’s first investment in the Irish market.

In addition, the utility owns and operates 358MW of operational onshore wind assets and purchases around 1.24GW of additional renewable generation. It also operates two gas-fired power plants, with a combined capacity of 747MW. It has a large pipeline of renewable projects, with a goal of adding approximately 1.5GW of renewable capacity by 2030.

Reflecting on the agreement, Ardian’s co-head of infrastructure, Juan Angoitia, said in a statement that Energia “has ambitious plans to grow, driven by secured capital projects and increasing energy demand… We have been impressed by Energia’s strong growth and resilience in the context of a volatile energy market.”

The utility was initially acquired by I Squared in 2016 for approximately €1bn ($1.16bn). The company, then known as Viridian, was subsequently rebranded as Energia. While its focus remains on power generation, the company made an entry into the data center development space earlier this year, announcing its intention to develop and power a 165MW data center in Dublin, in partnership with Microsoft.

In addition, the company also signed two corporate Power Purchase Agreements with Microsoft in March for energy from the 25MW Ballylongford Wind Farm in County Clare and the 25MW Crossmore Wind Farm in County Kerry.

Despite the investment, concerns in Ireland persist that it may miss out on the AI boom due to prevailing issues surrounding its power grid. According to Ciaran Forde, commercial vice president for data center operations at Eaton, restrictions had led to Eaton losing around 80 percent of its revenue from its Irish data center business. The country’s primary data center market, Dublin, is currently under a moratorium for new data center developments, which is set to last until 2028.

To alleviate these concerns, the Irish government proposed a new policy to support private wire agreements between data center operators and private generators. The policy will completely reform the current process where the semi-state-owned electricity company ESB holds a monopoly over the right to own and operate the transmission infrastructure. In addition, recent reports have surfaced that Ireland will begin to allow data centers to link up directly to fossil fuel plants to power the facilities.

Ardian has made several significant investments in the European data center space over recent years. Last March, it completed the acquisition of European data center operator Verne for a reported $1.2bn from D9 Infrastructure.