Microsoft Signs $7 Billion Power Deal With Chevron to Meet AI Demand

The surge in electricity consumption from generative AI model training and inference has prompted Microsoft to secure long-term power supplies as it expands data centers to support OpenAI’s ChatGPT and its own Copilot. Chevron, Engine No. 1 and GE Vernova announced a partnership on January 28, 2025, to develop natural-gas power plants alongside data centers, reducing reliance on existing power grids.

The three companies signed an exclusivity agreement on March 31, 2026, followed by the announcement of a 20-year power purchase agreement on June 22. Project Kilby, to be co-located near Pecos in West Texas, will expand from an initially estimated 2,500 megawatts to 2.67 gigawatts of generating capacity and is expected to begin supplying power in 2028. The project was previously estimated to cost about $7 billion, with Chevron due to make a final investment decision in 2026.