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Carlyle, KKR to build US Army data centers

The United States Army will use 50-year leases on underused base land to attract private developers to build data centers for rising AI computing demand, starting with projects in Texas and Utah.

Army Secretary Dan Driscoll said the Army will work with Carlyle Group on a site at Fort Bliss near El Paso, and with CyrusOne, backed by KKR, at Dugway Proving Ground, with each project expected to involve billions of dollars of private investment.

The developers would finance construction and operations in exchange for access to computing power, and David Fitzgerald said the approach is meant to reduce reliance on budget cycles.

The move comes as the Trump administration has taken steps to ease data center buildouts, while data center growth has become politically contentious over energy use and local impacts.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

The chosen Army bases face environmental and utility hurdles

  • Dugway Proving Ground in Utah serves as the U.S. military’s primary site for testing chemical and biological weapons 1.
  • A data center parcel sits about 3.5 miles from the North Wig Grid, a Dugway test area used for military testing, while the nearest natural gas transmission pipeline is about 30 miles away and long-haul fiber runs about 35 miles away along I-80 1.
  • Fort Bliss near El Paso lies in an “Extremely High” water risk area, which can limit data centers that use large volumes of water for cooling 1.
  • Other Army leasing locations include Fort Hood, Texas, and Fort Bragg, North Carolina, which both carry “High” water risk ratings 1.

Federal land may ease local pushback, yet permits still apply

  • A July 2025 executive order tells federal agencies to speed up federal environmental reviews and permitting for qualifying data center infrastructure projects, plus it urges use of federal land and resources for data center development 2.
  • Developers have walked away from projects after local resistance over energy demand, water use, and quality-of-life concerns, including Google’s cancelled 500-acre campus in Indianapolis 3.
  • The biggest bottleneck is “time to power,” which means the wait to lock in enough electricity and grid hookups, since new AI facilities can need more than 100 megawatts and may face multi-year interconnection queues 4.
  • The order also instructs the U.S. Secretary of Defense to pick suitable sites on U.S. military installations and lease available land through competition for qualifying projects, while meeting security and force protection needs 2.

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