Microsoft and Chevron plan one of the largest gas-powered data center projects in US

Microsoft has agreed to buy electricity from a new natural gas power station that Chevron plans to build in West Texas, committing itself to two decades of fossil-fuel-generated energy to keep its artificial intelligence operations running. The deal, disclosed Monday, calls for a facility with roughly 2.67 gigawatts of generating capacity, a scale that would place it among the biggest projects in the country pairing a gas plant directly with a data center campus.

Under the arrangement, Chevron will construct and operate the plant specifically to feed a data center that Microsoft will run, rather than sending the electricity into the broader regional grid. The two companies signed a 20-year purchase agreement, meaning Microsoft is locking in a long-term supply of power — and the associated carbon output — well into the 2040s to keep pace with the computing demands of its cloud and AI businesses.

Most of the electricity will come from a pair of large turbines built by GE Vernova, with additional generating capacity supplied by Solar Turbines, a unit of Caterpillar. That equipment supplier has drawn scrutiny before: Solar Turbines units are also installed at the gas-fired power operation Elon Musk's xAI has been running near Memphis without full permitting, a project that has faced pushback from residents and environmental groups over air quality.

Chevron, in announcing the venture, described it as one of the largest facilities of its kind in the United States where power generation and computing infrastructure are built side by side. Framing the plant that way underscores an emerging pattern among energy companies and tech giants: rather than waiting on grid upgrades or renewable buildouts, they are increasingly opting to erect dedicated fossil-fuel plants next to the data centers they serve.

The arrangement reflects a broader scramble across the tech industry to secure enormous amounts of reliable electricity as AI workloads expand. Training and running large AI models requires power on a scale that many regional grids cannot easily absorb, pushing companies like Microsoft, Google, Meta and xAI toward direct deals with energy producers — sometimes for nuclear or solar projects, but increasingly for natural gas, which can be built faster and run continuously regardless of weather.

That reliance on gas cuts against Microsoft's own public sustainability pledges, including its stated goal of becoming carbon negative by 2030. Locking in two decades of emissions from a single plant illustrates the tension technology companies face between promises to cut greenhouse gas output and the immediate need for uninterrupted electricity to power AI infrastructure that investors and customers are demanding right now.

Neither company detailed a construction timeline, and the project will still need to clear the standard permitting and regulatory review that applies to large power plants in Texas. Given the scrutiny already directed at similar gas-fired installations elsewhere, including the Memphis site tied to xAI, the West Texas plant is likely to draw attention from environmental advocates and local communities as details of its emissions and construction plans become public.

Source: TechCrunch