Microsoft secures 2.67 GW dedicated power from Chevron for Texas AI infrastructure

Microsoft and Chevron have finalized a 20-year power purchase agreement for a 2.67-gigawatt natural gas facility in West Texas. The co-located project aims to supply dedicated electricity to Microsoft's data centers, addressing surging energy demands for artificial intelligence while generating significant regional economic benefits.

Microsoft, a global technology corporation, and Chevron, a multinational energy company, announced a 20-year power purchase agreement for Project Kilby, a 2.67-gigawatt co-located natural gas power facility in West Texas. According to official disclosures, the phased development will utilize equipment from GE Vernova and Caterpillar, with initial power delivery scheduled for 2028 and a final investment decision expected by late 2026.

This development addresses the critical bottleneck of energy availability for advanced computing. As artificial intelligence workloads expand, hyperscalers require massive, dispatchable baseload power that avoids straining regional electrical grids. By generating electricity directly at the data center site, the project mitigates broader grid congestion while ensuring operational reliability for Microsoft’s cloud infrastructure.

The initiative significantly impacts the regional economy and the broader energy landscape. Official projections indicate the facility will generate over $10 billion in state and local tax revenues while supporting approximately 2,000 jobs. Environmentally, the plant will utilize brackish groundwater rather than freshwater and incorporate advanced emissions control systems.

Strategically, this partnership diversifies Chevron’s revenue streams, targeting mid-teen returns independent of traditional hydrocarbon price cycles. For investors, it highlights a growing trend where legacy energy majors monetize their resource advantages to supply the rapidly expanding digital economy, creating a new asset class of technology-focused power generation.