Chevron Wins 20-Year Contract to Power Microsoft Data Center
A project by Chevron Corp and Engine No. 1 has secured an agreement to supply natural gas-based electricity to a Microsoft data center project in West Texas for 20 years.
The 2.67-gigawatt (GW) power plant, called Project Kilby, and the data center will be co-located. "This positions Kilby among the largest co-located natural gas power and data center developments in the U.S., supporting the next phase of American AI growth by leveraging America's natural gas advantage", Chevron said in an online statement Monday.
"By co-locating new, large-scale power generation with the data center, Kilby is designed to deliver reliable, dispatchable electricity directly to Microsoft while aiming to mitigate impacts on the regional grid that consumers rely on", it said.
The partners expect to make a final investment decision this year and start generation from the project in 2028.
"AI is reshaping the global economy, and abundant, affordable, reliable energy is essential to fueling that transformation", said Jeff Gustavson, Chevron president for New Energies. "Chevron is uniquely positioned to deliver power to customers with certainty, speed and at a competitive cost, leveraging Permian natural gas and our proven execution capabilities".
Noelle Walsh, Microsoft president for Cloud Operations + Innovation, said, "The rapid growth we're experiencing in AI and cloud, driven by customer demand, requires energy infrastructure that can scale quickly and reliably. Our agreement with Chevron helps ensure we'll have dedicated, large-scale power to support the evolution and reliability of advanced compute".
Most of Kilby's capacity will come from GE Vernova turbines. The rest will be enabled by Caterpillar Inc's Solar Turbines.
Chevron and Engine No.1 launched their partnership last year, aiming "to establish the first multi-gigawatt-scale co-located power plant and data center during President Trump's second term".
"The first projects, which the companies refer to as 'power foundries', are expected to leverage seven U.S.-made GE Vernova 7HA natural gas turbines, secured under a slot reservation agreement, on an accelerated timeline", said a joint statement January 28, 2025.
"The projects are expected to serve co-located data centers in the U.S. Southeast, Midwest and West regions.
"Power generation is not designed to flow initially through the existing transmission grid, reducing the risk of increasing electricity prices for consumers".
The partners aim to enable up to 4 GW, which they said is equivalent to the consumption of 3-3.5 million U.S. homes.
"The projects are expected to be designed with the flexibility to integrate lower carbon solutions, such as carbon capture and storage - which is capable of capturing >90 percent of the CO2 from the turbines - and renewable energy resources", it said.
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