Microsoft and Chevron Agree to Develop $7 Billion Texas Power Plant

Microsoft, Chevron Corp., and the investment fund Engine No. 1 entered into an exclusivity agreement on March 31 to develop a natural gas-fired power plant in West Texas. The proposed $7 billion facility, located near Pecos in the Permian Basin, is designed to provide a dedicated electricity supply for Microsoft's expanding AI data centers.

The plant is expected to initially generate 2,500 megawatts of electricity, with potential expansion to 5,000 megawatts, to power a co-located data center campus. By utilizing behind-the-meter generation, the partners aim to ensure reliability and avoid adding strain to the regional electricity grid. Chevron and Engine No. 1 have already secured seven large-scale gas turbines from GE Vernova Inc. to bypass global supply backlogs.

Chevron CEO Mike Wirth described the project as a strategic move to help the United States compete in the AI race against China. The plant could begin operating as early as late 2027, though it must first clear environmental and tax hurdles, with a final operational target date before 2030. All three companies emphasized that no commercial terms have been finalized and no definitive agreement exists at this time.