Data Center Dealmakers: A New Era of Power and Compute

Vinson & Elkins Partners Creighton Smith and Milam Newby share the story behind a groundbreaking AI infrastructure transaction — and what it took to get the deal done.

Creighton, Milam — let me begin with a congratulations. You and a Vinson & Elkins team just closed a groundbreaking transaction that is set to create one of the world’s largest dedicated AI compute installations. What should we know about the deal?

Creighton: Thanks very much. We advised Fidelis New Energy in its sale of American Intelligence & Power Corporation to Nscale, a UK-based full-stack AI cloud company. The deal gives Nscale control of the Monarch Compute Campus, a massive 2,250-acre AI data center and energy infrastructure site in Mason County, West Virginia.

Milam: Right. Fidelis had been developing Monarch for several years. As part of the transaction, Nscale created a new division called Nscale Energy & Power, which absorbed the Fidelis team, meaning that the people who developed Monarch will continue to do so under Nscale’s ownership.

Creighton: Nscale has also separately contracted with several high-profile names, signing a letter of intent with Microsoft to lease 1.35 gigawatts of AI compute at the site using next-generation NVIDIA Vera Rubin GPUs. And prior to its sale of AIP Corp to Nscale, Fidelis partnered with Caterpillar to supply the site with large-scale natural gas generator systems. It’s an extraordinary project on so many levels.

With a lot of power capacity as well.

Milam: Enormous. Not long ago, the largest data center campuses were measured in megawatts. Monarch’s initial capacity will be almost 2 gigawatts. That 2 gigawatts is expected to be online by the first half of 2028, and plans are for it to expand to about 8 gigawatts by 2031.

Creighton: Beyond the raw capacity, what makes this project truly innovative is its design. We hear so much about how power availability is the single biggest constraint to scaling AI infrastructure — and for good reason. But Monarch’s vertically integrated energy-to-compute model enables it to sidestep that constraint.

How so?

Creighton: Instead of having to secure power from local utilities and the public grid, Fidelis worked with the governor and legislature of West Virginia to equip Monarch with its own microgrid, powered primarily by natural gas and battery energy storage systems. This setup co-locates power generation, energy distribution, and hyperscale compute infrastructure all on the same site.

Milam: Taken together, this is a rare structure in the United States: a data center with gigawatt-level capacity, supported by a fully islanded, behind-the-meter power system designed specifically for AI workloads, and certified by a state government to produce, manage, and consume power as one integrated system.

Incredible stuff. What does the state certification entail?

Milam: In short, traditional utilities are often subject to extensive and fragmented oversight, which can slow projects down and make them more expensive and complex. But last spring, West Virginia passed a law establishing a certification program that allows qualifying large-scale projects to generate and distribute their own electricity within designated microgrid districts — generally outside the jurisdiction of the Public Service Commission, the state’s utility regulator.

By reducing its exposure to traditional utility regulation and streamlining numerous permitting and approval processes, qualifying for this microgrid certification should substantially compress Monarch’s development timeline and lower its costs.

The certification also helps protect local ratepayers, I hear.

Creighton: It does. Because Monarch draws no electricity from the public grid, it cannot directly cause rate increases through increased demand or grid congestion. The certification adds a robust legal framework on top, prohibiting any costs related to the microgrid’s construction, operation, or infrastructure from being passed on to regulated utility customers.

A couple more points on the local community: The campus is projected to create more than 2,800 full-time jobs at full buildout, many paying more than $100,000 a year. And to ensure local residents are positioned to fill these roles, nearby colleges are partnering with Nscale to develop specialized training and apprenticeship programs in engineering and facility management. The $40 billion investment is expected to generate an estimated $150 million in annual tax revenue for Mason County.

Complex deals like this — they have a lot of moving parts, and must require efficient cross-practice collaboration.

Milam: Absolutely, especially when your timeline is as tight as ours was. The firm helped Fidelis set up AIP Corp in late December, and Nscale entered the picture after that. To meet the signing target for the Nscale deal — NVIDIA’s 2026 GTC conference in March — we had to fit what is typically months of work into weeks.

The deal was extremely complex, especially on the tax side, where the many cross-border issues at play made it critical for the structure to be tax-efficient. Three of our senior tax attorneys — Todd Way, Lina Dimachkieh, and Allyson Seger — lent us so much of their time and expertise to ensure that the tax structure was as efficient as possible.

Creighton: All true — the deal was complex, the timeline was tight, and the stakes for the Fidelis team were high. And with more than 20 lawyers coordinating across eight practice groups, teamwork was imperative. But I should emphasize that none of those dynamics are new for Vinson & Elkins. Our firm has deep experience navigating them, and this deal is just another example.

Getting it done is in many ways a testament to our firm’s culture — to our commitment to excellence, to our collaborative mindset, to our dedication to client service, and to our long-term investments in developing young lawyers.

Thinking back on the race to signing day, was there any moment that you found especially memorable or rewarding?

Milam: Not a moment per se, but the incredible work of the associates on this team has really stuck with me. Alongside Counsel Alexander Baker, Creighton and I led the team, devoting many hours to the negotiations and the intricacies of the transaction. But we could not have done that senior-level work without knowing that the associates were locked in everywhere else. Their analytical thinking, attention to detail, and composure under pressure were indispensable.

Creighton: You know, there is really something special about advising an early-stage company through a significant milestone — to see how much it meant to Fidelis, after all the hard work they put into building their company and Monarch from the ground up.

When we took on this deal and learned what the signing target would be, I remember thinking: “Wow, that’s ambitious. The counterparties will probably end up pushing it back.” But they never did. So, it was on us to match their ambition, and being able to hit the target for Fidelis on favorable terms was very rewarding indeed.

This convergence of power and compute — it really is creating a novel type of deal, one that I suspect may inspire others in the market.

Milam: We think so, too. There’s already a lot of public focus on Monarch — not just because of Nscale’s extraordinary growth trajectory and the high-profile names involved, but because of the project’s unique approach to power and the regulatory environment that has helped make it possible. In the coming years, we expect that data center developers and investors — as well as the tech and energy industries more generally — will be watching closely to see how the project evolves.

Creighton: Soaring demand for data center capacity has created an urgent need for power to support it, and all signs are that activity in this space will continue to grow. Yet very few law firms have the knowledge, skill, and experience needed to advise on these buildouts and the highly technical transactions involved.

Vinson & Elkins is proud to be one of the few that does — in project development, project finance, conventional and renewable energy, M&A, regulatory, private capital, tax, environmental, real estate, and more. So we feel positioned as well as anyone to guide clients through every legal aspect of a data center project, and look forward to serving them as opportunities continue to emerge.