- Microsoft signed a 20-year power purchase agreement with Chevron.
- Under the deal, Project Kilby, a co-located power facility in West Texas, will supply Microsoft’s data centre with electricity.
- The deal with Chevron highlights Microsoft’s willingness to invest in fossil fuels for its electricity needs
Microsoft has signed an agreement with oil giant Chevron for powering its data centre in West Texas.
Under the deal, Energy Forge One LLC, a wholly owned subsidiary of Chevron, will develop a co-located power facility in West Texas, called Project Kilby, to provide dedicated electricity to the data centre.
The 20-year power purchase agreement is a collaboration between Chevron and investment firm Engine No. 1, the company said in a release.
Project Kilby is projected to deliver almost 2.7 gigawatts of electricity, equivalent to the energy required to run about two million homes, CNBC reported.
A large part of the electricity will come from large gas turbines supplied by GE Vernova. Turbines will also be provided by Caterpillar.
The data centre site in Reeves County will host the power infrastructure. Construction has not yet started on Project Kilby. Chevron is expected to make a final investment decision on the project later this year. The data centre will start receiving electricity in 2028.
Technology companies like Microsoft are in a race to secure electricity supply for their data centres to support AI services such as Copilot and ChatGPT.
The data centre campus in Pecos, Texas, is forecast to increase Microsoft's data centre capacity by 2 gigawatts, as per Reuters.
The multi-billion-dollar data centre investment is expected to support more than 6,000 construction jobs as well as hundreds of permanent operational roles, Microsoft said.
The tech giant has invested mostly in renewable energy to offset the carbon-dioxide emissions from its data centres. But Microsoft is also on the lookout for other energy sources that can reliably meet the 24/7 demand of its data centres more reliably.
The deal with Chevron highlights Microsoft's willingness to invest in fossil fuels for fulfilling its electricity needs.
"Our agreement with Chevron helps ensure we'll have dedicated, large-scale power to support the evolution and reliability of advanced compute. Through this partnership, we're delighted to grow with and become a deeper part of the West Texas community,” Noelle Walsh, Microsoft president of Cloud Operations + Innovation, said.
Chevron is positioned to deliver natural gas quickly and reliably from the Permian Basin in West Texas and southeastern New Mexico.
Kilby is expected to be one of the largest co-located natural gas power projects in the US, as per Chevron.
