Microsoft and Chevron plan 2.67 GW gas-powered data center in West Texas

Microsoft and Chevron announced plans on June 22, 2026 to build a 2.67 gigawatt natural gas power plant in West Texas. The facility will provide dedicated electricity to a Microsoft-operated data center under a 20 year power purchase agreement.

The project, named Project Kilby, will use two large GE Vernova turbines and additional units from Caterpillar subsidiary Solar Turbines. According to the Environmental Integrity Project, the plant could release more than 13 million tons of carbon dioxide, 3,200 tons of criteria air pollutants, and 278,000 pounds of hazardous air pollutants annually.

Project Kilby details

Chevron described the development as among the largest co-located natural gas power and data center projects in the United States. Key facts include:

• 2.67 GW total capacity, enough to power roughly 2 million homes.
• Two GE Vernova turbines will supply the majority of power; Solar Turbines units will provide the remainder.
• The power plant will be located in West Texas, a region with existing gas infrastructure and growing data center demand.
• Microsoft will purchase all electricity from the plant for 20 years, locking in fossil fuel generation through the mid 2040s.

The announcement marks a significant shift for Microsoft, which has publicly committed to eliminating its carbon emissions by 2030. The company had previously invested in renewable energy and carbon removal technologies.

Implications for Microsoft's climate goals

Microsoft's 2030 carbon negative pledge now appears harder to reach. The company has been telegraphing a move toward gas powered data centers for months, citing the need for reliable, around the clock power for AI and cloud workloads. Critics argue that the 20 year contract contradicts Microsoft's stated sustainability ambitions.

The project also highlights broader tensions in the tech industry. Hyperscalers are struggling to secure enough clean energy to meet surging demand from AI training and inference. Natural gas offers a bridge solution but locks in emissions for decades. Microsoft has not announced any offset or carbon capture plans for Project Kilby.

What comes next: Chevron will seek permits and begin construction, with the plant expected to come online in the late 2020s. Microsoft will continue to operate its data center on site. The project will likely face legal challenges from environmental groups and scrutiny from regulators over air quality impacts in Texas.