Editor’s Note: The following is from the forthcoming March 2026 issue of Gas Compression Magazine. Subscribe today and never miss an issue. Print or digital delivery, Gas Compression Magazine is always free.
Kodiak Gas Services Inc. (Kodiak) will acquire Distributed Power Solutions LLC (DPS). The US$675 million deal moves Kodiak, a major player in large-horsepower contract compression, into the fast‑growing distributed power generation market.
DPS specializes in temporary and distributed power generation solutions designed to support a broad range of operational needs. It deploys turbine and reciprocating engine generators, load banks, and electrical distribution systems for both short‑ and long‑term applications. The company’s project portfolio spans data centers, micro‑grids, utility base loading, bridge‑power projects, and emergency power applications — all supported by engineering, installation, and operational services.
The acquisition expands Kodiak’s digital infrastructure customer base and deepens its relationships with upstream and midstream energy customers.
Expected to close in April 2026, the acquisition includes DPS’s 384‑MW fleet of Caterpillar‑powered reciprocating engines and turbines. Its contracted portfolio is anchored by a 100 MW deal serving a large data center operator with 99.9% reliability for more than a year.
For Kodiak, the fleet aligns nicely with its current workforce of more than 700 Caterpillar‑certified technicians. DPS’s management team contributes decades of commercial and operation experience in distributed power.
“We’ve been actively studying the distributed power market for some time, and I’m very happy to say that we have found the ideal asset base and management team to enter this exciting and growing market,” said Robert McKee, president, director, and chief executive officer of Kodiak during an investor’s call discussing the deal. “This transaction provides us with a state-of-the-art fleet of 384 MW of distributed power generation equipment, which includes both turbines and reciprocating engines, providing flexibility across a variety of applications and end markets.”
The acquisition addresses power challenges across North America, especially in digital infrastructure. With data center electricity demand expected to double by 2035, utilities are struggling to connect large loads. McKee noted that long lead times for new power generation equipment — some stretching into 2028 — make this acquisition particularly strategic. “We feel like the opportunity to acquire a quality fleet with existing customers and contracts, including data centers, is the right way to enter the distributed power end market,” said McKee. “Plus, the fleet is 100% powered by Caterpillar engines and turbines, a company we clearly know well. Our combined Caterpillar relationships and supply chain arrangements should be beneficial as we invest and grow the business.”
In December 2023, DPS entered a strategic partnership with Caterpillar to expand global access to large-scale mobile and permanent power solutions. The agreement brought together DPS’s expertise in temporary and mobile power with Caterpillar’s portfolio of natural gas generator sets, controls, and advanced power generation technologies. As part of the collaboration, DPS developed, promoted, and delivered Caterpillar‑powered projects.
“The US power market is at an inflection point with demand growth over the next decade expected to accelerate rapidly,” said Steven L. Green, Kodiak’s chief commercial officer. “Electricity demand for data centers in the US will double by 2035, accounting for over 50% of the power demand growth over that time period, a transformative demand increase on the grid that’s somewhat [comparable] to the [widespread adoption] of air conditioning in the 1960s. It has been well documented that power demand is overwhelming utility providers with hyperscalers and other large power consumers experiencing unprecedented wait times to connect to the grid (if they can connect at all).”
In regions such as the Pennsylvania-New Jersey-Maryland (PJM) Interconnection, which coordinates movement of wholesale electricity across 369,000 square miles (955,706 km2) and 13 states, interconnect wait times range from six to eight years. The result, Green said, is a structural shift. “Companies recognize that they need to provide their own power solution,” said Green. “In fact, based on third-party research, more than 40% of the data centers that are expected to be online by 2035 are not expected to connect to the grid, and instead, supply their own power solutions. Based on this, we believe that the market will need in excess of 60 GW [of] behind-the-meter power solutions. The distributed power industry is ripe for transformation. Once defined by short-term contracts and volatile cash flows, it is now moving to five- to seven-year plus contracts with healthy returns and stable cash flows.”
Beyond immediate market opportunity, Kodiak sees operational alignment between power generation and compression. McKee emphasized the advantages of a shared Caterpillar platform. “The thesis since we started looking at this has been Caterpillar‑qualified technicians that we can use on both sides of the fence — on power and compression. We think that there are opportunities there that are pretty significant. A lot of these reciprocating engines are the same engines that we’re using on our compressors.”
Kodiak built its reputation by transforming the historically cyclical compression sector into a stable, contract‑driven business with predictable cash flows. “We believe the distributed power industry is ready for a similar transformation as more data center and energy infrastructure companies are forced to provide their own permanent power solutions,” said McKee. “We’ve done this before and believe that our customer service focus, our deep bench of highly trained technicians, and our focus on large horsepower engines provide us with a unique competitive advantage in distributed power. Our goal will be to trend as much as possible towards long‑term infrastructure‑type primary power contracts. We want to minimize volatility, maintain stable cash flows, and mirror what we’ve done with the compression business.”
While distributed power presents new growth opportunities, Kodiak remains focused on its core compression operations. Growing natural gas demand, myriad liquefied natural gas expansions projects under development in the United States, and new Permian Basin takeaway capacity will drive compression growth in North America for the foreseeable future.
“We are seeing as much or more demand on the compression side as we’ve ever seen,” said McKee. “We have fully sold out our compression in 2026 and have begun taking orders for 2027 and into 2028. We want to continue growing the compression business. It’s a wonderful foundational business for us to leapfrog into this power business. This is a remarkable opportunity to gain access to a rapidly growing industry that is in the early stages of undergoing a tremendous transformation. Distributed power is a natural fit for Kodiak’s culture, our workforce, and our customers, and we’re excited for the future.”
