Microsoft Secures 20-Year, 2.67 GW Gas PPA for West Texas AI Data Center
MSFT•Microsoft has inked a 20-year power purchase agreement with Chevron to supply 2.67 GW of natural gas–generated electricity for its planned West Texas AI data center, with power starting in late 2028. The deal leverages Chevron’s Permian Basin output and adds fossil fuel generation to Microsoft’s $190 billion capex plan.
1. 20-Year PPA Agreement
Microsoft signed a 20-year power purchase agreement with Chevron to source electricity from a dedicated natural gas plant for its proposed West Texas AI data center. The arrangement commits up to 2.67 GW of generation capacity, powered by GE Vernova and Solar Turbines units, with initial power delivery expected in late 2028.
2. Project Kilby Development
Project Kilby spans over 2,000 acres near Pecos in Reeves County and will be developed in phases throughout the late 2020s and into the 2030s. Chevron will use its Permian Basin gas output to fuel the plant, which operates independently of regional grids to avoid ratepayer cost impacts.
3. Strategic and Financial Impact
This PPA aligns with Microsoft’s increased capital expenditure, part of a $190 billion budget, and reflects a strategic move to secure reliable, competitive-cost energy. The deal leverages local gas surpluses to reduce energy costs while introducing fossil-fuel generation into Microsoft’s traditionally renewable-heavy portfolio, potentially affecting long-term operating expenses and margins.
Related News
Sources
