Chevron signs 20-year power supply deal with Microsoft for Texas data center
Rising electricity demand from artificial intelligence infrastructure is pushing major technology companies to lock in long-term energy supplies for new data centers. Chevron says it has signed a 20-year agreement with Microsoft to provide natural gas-fired power for a proposed facility in West Texas, with first power expected by 2028.
Highlights
- Chevron signs a 20-year power supply agreement with Microsoft for its planned West Texas data center, known as project Kilby.
- Project Kilby will deliver initial power by 2028 with expansion planned to reach 2.67 gigawatts, pending a final investment decision later this year.
- Surging demand from AI-driven data centers like Microsoft's is fueling long-term energy deals and major generation projects in regions such as Texas.
Project Kilby timeline and supply plan
As reported by Reuters, Chevron says the agreement covers power from a planned plant in West Texas known as project Kilby, which is being developed to support Microsoft's proposed data center.The project is expected to deliver first power by 2028 and then expand over time to 2.67 gigawatts. Chevron also says it expects to announce a final investment decision for project Kilby by the end of this year.
AI data center demand drives energy deals
Technology companies, including Microsoft, are moving quickly to secure electricity supplies as they expand data centers used to run AI services such as ChatGPT and Copilot.The deal highlights how growing power needs from the data center sector are creating opportunities for energy companies, particularly in regions such as Texas where large-scale generation projects can support new computing capacity.
In our earlier analysis of Arm Holdings (ARM), we noted that the stock’s bullish momentum was supported by surging demand for energy-efficient AI chip architectures. We also highlighted that the upside case is tempered by risks such as an extremely elevated valuation and operational uncertainties, with key technical support levels seen as crucial to sustaining the trend.
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