Microsoft signed a 20-year power purchase agreement with Chevron on Monday to develop a 2.67-gigawatt natural gas power plant in West Texas to power its AI and cloud data centers. The initiative, called Project Kilby, is one of the largest co-located gas power and data center developments in the United States.
Two-decade power deal dedicated to AI data center
Under the terms of the agreement, the plant will provide dedicated electricity to a Microsoft-operated data center. Two large GE Vernova turbines will generate most of the power, with Caterpillar subsidiary Solar Turbines supplying the rest. Solar Turbines also provides turbines for xAI's unpermitted power plant near Memphis. Chevron stated that the project will be among the largest co-located natural gas power and data center developments in the U.S.
Although Microsoft has been signaling this move for months, it marks a significant shift for a company that has been vocal about sustainability. Microsoft has pledged to eliminate its carbon emissions by 2030, a goal that becomes harder to reach with this new power plant. The plant is expected to emit more than 13 million tons of carbon dioxide, along with thousands of tons of other pollutants, according to the Environmental Integrity Project.
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Environmental impact raises questions about carbon neutrality pledges
The vast energy needs of AI are driving tech giants to secure reliable baseload power. While renewables are growing, they cannot yet provide the continuous high-capacity power that large data centers require. Natural gas power plants offer flexibility but at a high environmental cost. This tension is mirrored across the industry. For instance, Nvidia and Solidigm recently launched a new CMX memory tier to address context bottlenecks in AI inference, as covered in this article. Similarly, AMD had to reinstate memory encryption after user outcry, a story detailed in this piece. These developments highlight the industry-wide struggle to balance performance, cost, and environmental responsibility.
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Project Kilby represents a concrete step toward fossil fuel dependency for AI infrastructure. Whether Microsoft can reconcile its data center expansion with its carbon neutrality promises remains to be seen, but the 13 million tons of CO2 expected from this plant alone make the 2030 target look increasingly challenging.
