Microsoft and Chevron sign 20-Year power deal For Texas data center
Microsoft and Chevron have signed a 20-year deal for a natural gas-fired power plant, Project Kilby, to supply 2.67 gigawatts of power to a proposed data center near Pecos, Texas. The plant, expected to start by 2028, will utilize cheap natural gas from the Permian Basin and operate independently of the local power grid. This partnership aims to meet Microsoft's growing energy demands for AI expansion.
Chevron Corp. and Microsoft Corp. have finalized a 20-year agreement under which Chevron will provide natural gas-fired power for a new, large data center Microsoft plans to construct near Pecos, Texas. This facility, dubbed Project Kilby, is projected to commence power generation by 2028 and eventually deliver 2.67 gigawatts of electricity.
The project is a collaboration between Chevron and investment fund Engine No. 1, and it will leverage abundant, inexpensive natural gas from the Permian Basin, which often produces excess gas. Jeff Gustavson, president of Chevron's New Energies, stated that this power plant will be self-sufficient, generating its own electricity and thereby avoiding any additional strain on the existing Texas power grid or local utilities.
Microsoft's aggressive expansion in artificial intelligence is driving its need for more data centers, with plans to double its current data-center footprint within two years. This partnership with Chevron is crucial for securing the substantial and reliable energy required for AI models, especially as data center demand is forecasted to double nationwide by 2030, raising concerns about grid capacity and consumer costs. Microsoft is also reportedly reassessing its 2030 renewable energy target in light of these escalating energy demands.