Microsoft plans Texas AI data center with on-site gas power deal

In short: Microsoft and Chevron plan a West Texas data center campus with a dedicated natural-gas power plant that could start producing electricity in 2028.

What happened

Microsoft is planning a large AI data center campus in Pecos, Texas. Data centers are buildings full of computers that run online services, and AI systems often need many of them, like a factory needs lots of electricity.

Chevron says it has a 20-year deal to supply power through a co-located natural-gas-fired power plant called Project Kilby. Chevron expects the plant to begin producing power by 2028, then ramp up over time to 2.67 gigawatts, which is a very large amount of electricity.

Reuters and Bloomberg reported the plant would be “behind the meter.” That means the electricity would go straight to Microsoft’s campus first, instead of being sent into the Texas power grid and then bought back, like a private power line for one customer.

Microsoft said the broader campus is a multi-billion-dollar investment over the next five to seven years. It could support more than 6,000 construction jobs and hundreds of permanent jobs. Chevron plans to make a final investment decision later this year, and the project is expected to use GE Vernova turbines, plus added capacity from a Caterpillar subsidiary.

Why it matters

This project highlights a growing tension around AI. New AI data centers need huge amounts of power, but this plan relies on natural gas, which releases carbon dioxide when burned. Environmental Integrity Project estimates, as cited by TechCrunch, that the project could emit more than 13 million tons of carbon dioxide over time, along with other air pollutants. That raises questions about how companies will meet climate pledges while also building the energy-heavy infrastructure needed for AI.

Source: NYTimes