KEY POINTS
- Microsoft, Chevron and Engine No. 1 signed an exclusivity agreement to develop power supply for AI data centers.
- The partnership is linked to a proposed $7 billion natural gas power plant in West Texas with 2,500 MW capacity.
- Microsoft is also expanding Texas data center operations as tech firms race to secure electricity for AI growth.
Microsoft, Chevron and investment firm Engine No. 1 have entered into an exclusivity agreement to develop power generation and supply projects, as technology companies scramble to secure electricity for rapidly growing artificial intelligence data centers.
These facilities are expected to support generative AI services such as ChatGPT and Copilot.
The companies said no commercial terms have been finalized and that a definitive agreement has yet to be reached. However, the arrangement signals Microsoft’s push to lock in long-term energy sources to support surging computing demand.
Chevron and Engine No. 1 had previously announced a partnership to build natural gas-based power plants adjacent to U.S. data centers, using turbines supplied by GE Vernova. The latest agreement with Microsoft is reportedly tied to a proposed natural gas-fired facility in West Texas, estimated to cost about $7 billion.
The plant is expected to initially generate around 2,500 megawatts of electricity, enough to power a large data center campus.
Chevron earlier said its first AI-focused natural gas power project in West Texas is targeted to begin operations by 2027.
In a related move, Microsoft has reportedly agreed to lease a Texas data center project that was originally being developed for Oracle and OpenAI. The deal further highlights the growing demand for energy infrastructure as AI workloads accelerate globally.
