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Power, but make it hyperscale
Microsoft just signed a 20-year power purchase agreement with Chevron for Project Kilby, a co-located natural gas power facility in West Texas expected to deliver about 2.67 gigawatts to Microsoft-operated data centers. That’s not a side quest — that’s a massive infrastructure bet on the future of AI.
Why investors should care
AI models are thirsty little beasts, and the electricity bill is quickly becoming the real choke point. Microsoft is trying to lock up reliable, dispatchable power now so it isn’t left fighting the rest of the grid later. The first power delivery isn’t expected until 2028, assuming Chevron makes its final investment decision by the end of 2026.
The twist: Big Tech is becoming an energy company
The project leans on Permian Basin natural gas and is designed to sit right next to the data center, which should help with speed and reliability. Translation: Microsoft is basically saying the cloud now needs its own utility belt.
- Chevron’s Energy Forge One LLC will develop the project
- Most generation will come from GE Vernova turbines
- Additional capacity will come from Solar Turbines, a Caterpillar subsidiary
- The deal is expected to support nearly 2,000 jobs and more than $10 billion in state and local tax revenue
Big picture: when Microsoft starts signing energy deals that sound like infrastructure megaprojects, it’s a reminder that AI isn’t just about chips and software anymore. It’s also about who can keep the lights on.