Microsoft and Chevron just signed a 20-year power purchase agreement for what might be the most telling infrastructure project in the AI arms race. Project Kilby, a combined natural gas power plant and data center in West Texas’s Permian Basin, is designed to generate roughly 2.67 gigawatts of capacity. That’s enough electricity to power approximately 2 million homes, all routed to feed Microsoft’s AI ambitions.
The first power delivery is targeted for 2028, according to Stifel’s analysis, with full buildout stretching into the 2030s. A final investment decision is expected later in 2026, pending permits.
What Project Kilby actually is
Here’s the setup. Chevron’s Energy Forge One unit, working alongside investment firm Engine No. 1, will develop the facility in Reeves County near Pecos, Texas. The plant will primarily use GE Vernova turbines, supplemented by Solar Turbines from Caterpillar.
The critical design choice: the entire project operates behind the meter. In English, that means the data center draws power directly from the adjacent gas plant without touching the regional electricity grid. It’s a self-contained energy loop.
